The Russian Federation is reportedly considering accepting cryptocurrencies for international payments in response to Western sanctions against the country that were prompted by its full-scale invasion of Ukraine earlier this year.
The Moscow-based Interfax news agency and Reuters reported Friday that Ivan Chebeskov, who heads the Financial Policy Division within Russia’s Finance Ministry, is actively considering the possibility of incorporating crypto payments. “The idea of using digital currencies in transactions for international settlements is being actively discussed,” he said.
According to local newspaper Vedomosti, the Finance Ministry is considering adding the proposal on international payments to an updated version of a crypto law that’s still under construction.
Support for cryptocurrency legalization appears to be coming from all segments of the Russian government. According to trade minister Denis Manturov, Moscow plans to legalize crypto payments “sooner rather than later.” In April, the country’s Finance Ministry supported legalization in a bill titled “On Digital Currency.”
Related: Russia's updated crypto mining bill cuts tax amnesty for Bitcoin miners
The same month, the governor of the Bank of Russia admitted that the central bank was reconsidering its hostile stance toward digital assets. Central bank governor Elvira Nabiullina said that crypto is being considered among several measures to mitigate the impact of Western sanctions against the Russian economy.
1/ Russia can't & won't use crypto to evade sanctions.— Jake Chervinsky (@jchervinsky) March 1, 2022
Concerns about crypto's use for sanctions evasion are totally unfounded. They fundamentally misunderstand:
- how sanctions work
- how crypto markets work
- how Putin is actually trying to mitigate sanctions
It’s not entirely clear how Russia would be able to use digital assets to bypass Western sanctions given that the crypto market is not large enough or liquid enough to support a sovereign nation’s transaction needs. For starters, the United States Office of Foreign Assets Control has barred any U.S. person from doing business with individuals or entities on its Specially Designated Nationals and Blocked Persons (SDN) List.
The ban on doing business with Russian SDNs exists regardless of the payment systems in place. Jake Chervinsky, head of policy for the U.S.-based Blockchain Association, explained:
“There's zero reason to think crypto's existence will convince any of them to willfully violate sanctions laws, risking fines & jail time.