Due to their limited access to international finance, Russian businesses have started transacting in cryptocurrencies with their international partners. Even though these are still relatively small payments, government officials have noticed an increase in them, and this is before they have decided how to regulate them.
Cross-Border Crypto Settlements on the Rise in Russia as US Dollar and Euro Payments Decline
According to a government official, businesses operating under sanctions imposed on Russia due to the escalating conflict in Ukraine have begun using cryptocurrencies even though new rules governing this form of payment aren’t expected to take effect until at least 2023.
Ivan Chebeskov, director of the Ministry of Finance’s Financial Policy Department, acknowledged the trend in an interview with the Russian newspaper Izvestia. He also mentioned that these cross-border settlements are still only done on a small scale.
According to Vladimir Gamza, head of industrial, financial, and investment policy at the Council of the Chamber of Commerce and Industry of the Russian Federation, Russian entities are now actively using digital payment instruments, including cryptocurrencies.
Gamza also told the newspaper that payments made in dollars, euros, and other fiat currencies have decreased significantly as a result of the financial constraints. Russian banks were disconnected from SWIFT, the international payment messaging system, as part of the measures taken in response to Russia’s invasion.
The executive went on to explain that payments for imports of components for the manufacturing industry and settlements with what he called “unfriendly countries” now primarily involve digital coins. This is especially true for payments for Russian exports.
The import of consumer goods can also be paid for with cryptocurrencies. According to Vladimir Gamza, the volume of cross-border cryptocurrency transactions could potentially increase several-fold in the face of sanctions.
Earlier this week, Ivan Chebeskov was quoted by RBC Crypto as saying that it’s crucial to try all SWIFT payment alternatives. He also disclosed that the Russian Central Bank and the Finance Ministry plan to openly accept international cryptocurrency payments from any sector of the economy.
Russian authorities have been debating how to govern the country’s cryptocurrency market all year, and sanctions have persuaded them that they must at least legalize cross-border cryptocurrency payments. Anatoly Aksakov, the chair of the parliamentary Financial Market Committee, suggested in September that Russian companies might be allowed to select the coin they want to use.