Russian Central Bank to legalize cryptocurrency for payments

• Bank of Russia admits that the country’s international payments dream is impossible without crypto.
• Russia is considering establishing a legal framework for cryptocurrencies after seeing its access to the global financial system limited following its attack on Ukraine.

After wrestling with the Russian Finance Ministry regarding how to regulate the country’s crypto market for months, the Bank of Russia has finally agreed to legalize crypto for international payments due in large part to the current geopolitical fallout.

Russia’s central bank is set to allow cryptocurrencies to be used for cross-border settlements.

According to a report from a local media house on Monday, the Bank of Russia has acknowledged that “it is impossible to do without cross-border settlements in cryptocurrency.” The central bank finally agreed with the Ministry of Finance to legalize crypto for international transactions after rethinking its approach to regulating the asset class.

Deputy finance minister Alexei Moiseev revealed that the reconsideration by the country’s top bank is because “the situation has changed”.

As you well know, Putin’s government was slapped with punitive sanctions after invading its eastern European neighbor Ukraine. Allowing cross-border payments in crypto would thus help buffer the impact of the unprecedented financial sanctions imposed by Western powers, which have seen Russia’s access to international payment mechanisms severely restricted.

Russia will create a framework for the regulation of crypto 

Russian leaders and legislators have struggled to reach a consensus on the adoption and usage of crypto assets within the Russian Federation since the beginning of the warfare with Ukraine and the ensuing penalties. The Central Bank had previously called for a full ban on crypto. Russian President Vladimir Putin in July signed a law banning the use of cryptocurrencies as a means of payment for goods, services, and products across the nation.

However, the Russian Federation is now considering legitimizing the use of crypto in international transactions soon. The deputy finance minister stated that the “infrastructure that we plan to create is too rigid for the use of cryptocurrencies in cross-border settlements, which, of course, we must, first of all, legalize somehow.”

He went on to emphasize the need for a clear regulatory framework for crypto in Russia as many citizens presently rely on overseas platforms to open crypto wallets.

It is necessary to do this in Russia, involving entities supervised by the central bank, which are obliged to comply with Anti-Money Laundering and Know Your Customer requirements.

The fifth-largest economy moving toward legitimizing international crypto payments is an astounding development, which might reinforce the case for bitcoin as censorship-resistant money. Russia is also currently working on its central bank-backed digital currency dubbed the digital ruble. It is another tool that the Putin government intends to use to get around the international sanctions.