Starting September 1, Russia will begin trials to use digital assets, specifically cryptocurrencies, for international transactions. The move is seen as Moscow's response to Western sanctions, which have heavily impacted its economy.
Leveraging the National Payment Card System
The trials will involve the National Payment Card System (NPCS), a platform established in 2014, which already handles domestic interbank payments and operates the Mir payment cards. The NPCS was chosen due to its robust infrastructure and regulatory framework, making it an ideal platform for experimenting with digital currencies. The central bank, which oversees the NPCS, is fully regulating the experiment, ensuring compliance with national financial policies. With the NPCS, Russia hopes to ease the payment difficulties its exporters face, which have been worsened by international sanctions.
The Legislative Framework
This development 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 that lay 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 cross-border transactions, while the other authorizes specific institutions to mine crypto. These bills were signed into law by Russian President Vladimir Putin on August 8, providing a framework for the upcoming trials.
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.
The trials for using cryptocurrencies in international transactions represent a significant step for Russia in circumventing Western sanctions and integrating into the global financial system. Successful implementation could open new opportunities for Russian companies.
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