- Utilizing the National Payment Card System
- The Legislative Framework
- Next Steps
Russia prepares to trial the use of cryptocurrencies for international payments starting September 1. These trials are seen as Moscow's response to Western sanctions imposed due to the ongoing conflict in Ukraine.
Utilizing the National Payment Card System
The National Payment Card System (NPCS), established in 2014, has been chosen for these trials. It already handles domestic interbank payments and operates the Mir payment cards. The NPCS's robust infrastructure and regulatory framework make it an ideal platform for experimenting with digital currencies. The system's existing capabilities, such as interbank settlement and clearing, provide a reliable foundation for the new initiative. The central bank, which oversees the NPCS, fully regulates the experiment to ensure compliance with national financial policies. Through the NPCS, Russia hopes to alleviate the payment difficulties its exporters face. International sanctions have made it challenging for Russian businesses to purchase foreign supplies and receive payments from abroad, and integrating cryptocurrencies could offer a new avenue for these transactions, bypassing traditional financial channels.
The Legislative Framework
This initiative follows a series of legislative changes in Russia aimed at integrating cryptocurrencies into the national economy. In July 2024, the Russian parliament passed two key bills laying the groundwork for the use of digital assets in international trade. One of these bills legalizes the use of cryptocurrencies as a payment method for international transactions, while the other authorizes specific institutions to mine cryptocurrency. These bills were signed into law by President Vladimir Putin on August 8. The newly enacted laws provide a framework for the upcoming trials and establish the legal basis for using cryptocurrencies in international trade. Russians have traditionally been cautious when it comes to digital assets, but their stance is changing thanks to global financial developments.
Next Steps
If the trials prove successful, Russia may see the establishment of crypto trading platforms by the Moscow Exchange and the St. Petersburg Currency Exchange as early as next year. These platforms would allow for the exchange of rubles and cryptocurrencies, providing a regulated environment for such transactions. However, the path to full integration is not without its hurdles. Traditional cryptocurrency exchanges, which operate outside of government control, present a different set of challenges. According to finance minister Anton Siluanov, Russia is willing to explore digital assets but is cautious about embracing unregulated platforms.
Conducting trials for the use of digital assets could open new opportunities for Russia's international trade, circumvent Western sanctions, and enhance economic stability.
