Key Takeaways
- The Russian government is open to the idea of enabling cryptocurrencies to be used for foreign payments.
- By moving forward with this plan, the country may be able to lessen the impact of Western sanctions against Moscow.
- Banks currently have enough foreign currency liquidity, decreasing overall threats to financial stability posed by sanctions, explains Ksenia Yudaeva, First Deputy Governor of the Russian Federation’s Central Bank.
A top bank official said on Tuesday that Russia’s central bank is open to allowing the use of cryptocurrency for international payments, indicating that the country’s anti-digital currency stance may be softening.
“In principle, we don’t object to the use of cryptocurrency in foreign transactions,” Ksenia Yudaeva, the central bank’s First Deputy Governor, said in a press conference. However, Yudaeva stressed that the bank, as the governing authority, continues to view the widespread usage of bitcoin as a financial threat in Russia.
The financial authority’s flexibility, on the other hand, is limited.
“We still feel that active usage of cryptocurrencies within the country, particularly within Russia’s financial system, poses significant threats to residents and users,” Yudaeva stated. “We believe the hazards could be significant in our country.”
Russian officials are debating how to regulate the country’s crypto market and digital currency usage, with the central bank previously asking for a blanket ban. Months of negotiations have come and gone, but no agreement has been achieved between various government ministries and legislators.
Over the last year, the Russian argument on not just the use of digital currencies like bitcoin, but also the practice of mining bitcoin has been a heated topic. The Central Bank advocated a general prohibition on bitcoin mining in January.
“Although, of course, we also have certain competitive advantages here, notably in the so-called mining,” Russian President Vladimir Putin said, referring to the country’s natural environment and energy surpluses.
The State Duma criticized the Central Bank’s proposal to ban cryptocurrency as a bad judgement. Deputy Anton Gorelkin believes that strong actions against digital assets will have a negative impact on Russia’s technological growth.
Allowing cryptocurrency to be used to settle international funds, the finance ministry said last week, would help Russia counter the impact of Western sanctions imposed since Moscow sent tens of thousands of troops into Ukraine, which have cut a number of Russian banks off from the global financial system.
Overall threats to Russian financial stability as a result of Western sanctions imposed on Russian lenders, according to Yudaeva, have decreased because banks now have enough foreign currency liquidity.
Russia’s Ministry of Finance responded to the government’s proposal with its own bill, aimed at respecting the Bitcoin ecosystem and empowering those who operate enterprises in it through regulatory norms. Some Russian Federation members now think bitcoin is only a “matter of time.”
