Russian lawmakers have passed a bill allowing businesses to use Bitcoin and other cryptocurrencies for international trade. This development aims to circumvent Western sanctions imposed following Russia’s invasion of Ukraine. The new law, anticipated to take effect in September, is designed to address delays in international payments, particularly with key trading partners like China, India, and the UAE.
A Strategic Response to Sanctions
Central bank Governor Elvira Nabiullina, a strong supporter of the law, announced that the first cryptocurrency transactions are expected to occur before the year’s end. The central bank will establish an “experimental” infrastructure for these payments, with additional details to be released soon.
“The risks of secondary sanctions have grown,” Nabiullina stated. “They make payments for imports difficult, and that concerns a wide range of goods.”
The legislation also includes regulations on cryptocurrency mining and the circulation of other digital assets but maintains the existing ban on cryptocurrency payments within Russia. The central bank highlighted that payment delays have caused an 8% drop in Russian imports in the second quarter of 2024.
Overcoming Payment Challenges
Despite efforts to shift to trading partners’ currencies and develop an alternative BRICS payment system, many transactions still rely on dollars and euros via the SWIFT system, risking secondary sanctions. Nabiullina emphasized that these sanctions have complicated import payments, extending supply chains and increasing costs.
Ensuring Smoother International Trade
This decision by Russian lawmakers aims to mitigate the economic challenges posed by sanctions and ensure smoother international trade operations. Anatoly Aksakov, the head of the Duma lower house of parliament, reportedly told lawmakers, “We are taking a historic decision in the financial sphere” by passing this legislation.
Russia’s legalization of Bitcoin and cryptocurrencies for international trade marks a significant shift in its financial strategy, aiming to bypass the limitations imposed by Western sanctions. While the new law does not lift the ban on crypto payments within Russia, it opens up new avenues for international trade, potentially stabilizing and boosting the country’s economy.
