Russia starts trials to leverage cross-border crypto transfers to evade sanctions from the West and address economic woes.
As Russia faces numerous sanctions from nations worldwide, causing its economy to take a massive hit, it will try its hands at using crypto to sidestep the blockades. It will indulge in cross-border crypto transaction trials from September 1.
A bill revolving around the trials and the full-scale implementation of crypto remittance systems was passed as legislation at the end of July, with Russian President Vladamir Putin signing it into law. While the ban on using crypto as legal tender within the country remains, the law allows cross-border payments with the asset class.
The trials will occur via Russia’s National Payment Card System (NPCS), which oversees interbank settlements through its national currency, the ruble. Now, it will facilitate the exchange of crypto into ruble and vice versa as Russia tries to attract international business partners to adopt the system for transacting with the nation. The Central Bank of Russia will supervise the exercise.
Russian businesses are struggling to keep up due to the sanctions, as they cannot pay suppliers in and get paid for exports from jurisdictions like the US, the EU, and many others. Multiple Russian banks are blocked from using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) for global remittances. This new crypto-compatible network is an answer to that. However, it will come with tremendous trial and error. Finance Minister Anton Siluanov mentioned earlier this month, “We haven’t found a solution yet on how to do this.”
With the new law allowing all of this, the central bank holds the power to dictate how the trials go and make changes at any time. It can also exclude or change parts of the law as the trials proceed.
The West Will Proactively Introduce Secondary Sanctions
Nonetheless, using crypto to evade transactions may not be an easy feat. The West will look to impose secondary sanctions to stop cross-border crypto remittances between Russian and international businesses. Crypto transactions can be tracked on-chain, so Western governments will address sanctions bypasses using these assets in other ways.
