Considering local digital currency release to bypass international sanctions - a potential move by Russia
In a move to circumvent international sanctions and facilitate trade, particularly with countries like China and India, Russia has been increasingly leveraging cryptocurrencies and related payment systems. This shift, which has seen the country become the second-largest cryptocurrency miner globally, is aimed at easing trade pressures from sanctions.
Previously, local ratings agency ACRA highlighted frictions for foreign Digital Financial Asset (DFA) holders due to the requirement of onboarding with Russian banks. However, the Russian central bank has recently launched an experimental program to support the use of DFAs and a regulated tokenization regime for imports and exports.
One such example of this regulated tokenization regime is the AE Coin, a dirham stablecoin authorized by the Central Bank of the UAE, which was recently launched. Another noteworthy stablecoin mentioned by the Deputy Director at the Russian Finance Ministry, Osman Kabaloev, is Tether, a popular stablecoin used for cross-border payments.
Kabaloev has proposed the idea of Russia launching a stablecoin for import and export payments. This comes after Russia passed a law a year ago allowing DFAs to be used for cross-border payments. The Russian central bank initially resisted the use of cryptocurrencies for cross-border payments but has now launched a new experimental program to support their use for imports and exports.
There have been reports of plans to issue a stablecoin in the Chinese yuan as well as a BRICS basket. In fact, there are already two experimental programs for cross-border payments in Russia: DFA issuance and the regulated tokenization regime.
Kabaloev made his comments at a conference of the Association of Russian Banks, according to Reuters. There's also been much talk of a BRICS Bridge, a planned cross-border CBDC payment system for local currency payments amongst the ten BRICS member states.
The potential implications of Russia’s crypto and stablecoin adoption for trade include sanctions evasion, increased systemic risk in crypto markets, a shift in global trade dynamics, and innovation in cross-border payments. This pragmatic reliance on crypto-based tools is reshaping trade finance in the face of geopolitical restrictions.
- The Russian Finance Ministry's Deputy Director, Osman Kabaloev, has suggested launching a stablecoin for import and export payments in Russia, following the country's authorization to use Digital Financial Assets (DFAs) for cross-border payments.
- Kabaloev's proposed stablecoin idea comes after the Russian central bank launched an experimental program to support the use of DFAs and a regulated tokenization regime for imports and exports, one example being the AE Coin, a dirham stablecoin authorized by the Central Bank of the UAE.
- There are also reports of plans to issue a stablecoin in the Chinese yuan, in addition to a BRICS basket, and discussions of a BRICS Bridge, a proposed cross-border CBDC payment system for local currency payments amongst the ten BRICS member states.
- With Russia increasingly leveraging cryptocurrencies and related payment systems, and its growing use of stablecoins for trade, there are potential implications for trade finance, such as sanctions evasion, increased systemic risk in crypto markets, a shift in global trade dynamics, and innovation in cross-border payments.
