On Tuesday, Russian lawmakers approved a brand new law allowing using cryptocurrencies for international payments because the country faces ongoing financial pressure because of Western sanctions.
The State Duma, the lower house of Russia's parliament, on Tuesday gave the green light to recent laws that might allow corporations to make use of cryptocurrencies for cross-border trade, local media reported.
“We are making a historic decision in the financial sphere,” Duma Chairman Anatoly Aksakov told deputies on Tuesday, Reuters news agency reported.
The Russian central bank also wants to make use of cryptocurrencies to perform cross-border money transfers. Its head said crypto-based payments can be possible before the tip of 2024.
“We are already discussing the terms of the experiment with ministries and departments as well as with companies and expect the first payments of this kind to be made before the end of this year,” she said.
The Russian Embassy in London was not immediately available for comment on CNBC's plans to pass pro-crypto laws on Tuesday.
The central bank's commitment to using cryptocurrencies as a way for cross-border payments represents a departure from the regulator's previous stance toward the technology.
In January 2022, the Russian Central Bank proposed banning using cryptocurrencies for transactions in addition to the mining of digital currencies, citing threats to financial stability, residents' welfare and monetary sovereignty.
Under the pressure of sanctions
This comes as growing tensions between Russia and the US and its allies have led to countless sanctions against individuals and corporations in Russia in retaliation for the attack on Ukraine.
The United States, the European Union and the United Kingdom are among the many countries that imposed sanctions on Russia following its invasion of Ukraine in February 2022. They have further increased pressure on the country, targeting President Vladimir Putin, the Russian financial sector and various oligarchs.
In addition, Russia is currently considering introducing a digital version of the ruble.
Central bank digital currencies or CBDCs are different from cryptocurrencies. Unlike Bitcoin Unlike other cryptocurrencies that are usually not subject to any central authority, CBDCs are issued directly by the federal government and aim to duplicate fiat currencies in the shape of a digital token.
As Russian news agency Interfax reported, Central Bank Governor Nabiullina said on Tuesday that the regulator would try to maneuver away from a pilot phase and achieve a mass introduction of the digital ruble from July 2025.
Can cryptocurrencies help countries circumvent sanctions?
Other sanctioned countries have often attempted to avoid such financial restrictions by utilizing cryptocurrencies.
North Korea has been accused on several occasions of raising tens of millions of dollars price of cryptocurrencies to fund various government programs and evade foreign sanctions.
The North Korean state-backed hacker group Lazarus was behind an enormous heist on the Ronin Network, a blockchain that supports a well-liked nonfungible token (NFT) game called Axie Infinity. In the hack, cybercriminals stole over $600 million price of digital tokens, blockchain analytics firms Elliptic and Chainalysis previously reported.
Cryptocurrency proponents, however, claim that the digital assets are a useful gizmo for combating illegal activities. This is since the networks underlying them, called blockchains, are public and have a historical record of transactions that’s cryptographically secure and can’t be altered.
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