Key Highlights:
- Putin calls for a more independent international settlement system;
- Russian president blasts West for “illegitimate” sanctions;
- Russia moves to create a native crypto exchange,
- Russians adopt crypto for cross-border settlements.
As the war in Ukraine continues to blow hot, Russian President Vladimir Putin has called for a rewrite of the international settlement system, saying it needs to be more independent of banks and third-party influence. Putin’s comments come as his country continues to battle stringent sanctions and restrictions after its military invasion of Ukraine.
Source: CNBC
The Russian president made the comments in a statement at the artificial intelligence conference hosted by Sberbank, explaining that the new system must be based on digital currency and blockchain technology.
Narrating that international settlements are under threat amid the agitated relations between his country and the Western powers, he noted:
“The technology of digital currencies and blockchains can be used to create a new system of international settlements that will be much more convenient, absolutely safe for its users, and, most importantly, will not depend on banks or interference by third countries. I am confident that something like this will certainly be created and will develop because nobody likes the dictate of monopolists, which is harming all parties, including the monopolists themselves.”
Putin added that it was “possible to create a new system of international payments based on digital currency technologies and distributed registries, much more convenient, but at the same time completely safe for participants and independent of banks and third-party interference.”
The Russian president also said that the current international payment method is expensive to operate, blaming the financial groups in charge of international settlement for what he calls an anomaly. He said:
“Today, the system of international payments is expensive, with correspondent accounts and regulation controlled by a small club of states and financial groups.”
While describing the sanctions imposed by the West as illegitimate, the 70-year-old Russian leader asserted that international settlements have become a point of attack, further noting that “our financial institutions know this better than anyone because they are exposed to these practices.”
In March this year, the Bank for International Settlements delisted Russia from its service list as a countermeasure after it invaded Ukraine. Since then, Russia has become more open to the use of crypto as a tool to bypass some of the sanctions levied against it.
Russia’s Plan to Create a Crypto Exchange
Reports show that Russian authorities plan on developing a state-run crypto exchange to capture the billions of rubles in tax revenue they believe they have been losing all the while.
Source: Shutterstock
“Cryptocurrencies circulate in a large stream outside government regulation,” said Sergei Altukhov, a member of the State Duma (the lower house of the Federal Assembly of Russia) economic policy committee. In October 2022, the Russian Ministry of Finance revealed that Russian companies conducting business with the Russian jurisdiction have begun using cryptocurrencies to circumvent restrictions on international trade.
Source: Twitter
That said, the Russian government has been working on a plan and debating legal specifications for international cryptocurrency transactions for several months now. Not surprisingly, the Russian Federation has been calling for the use of a digital ruble over regular cryptocurrencies.
That said, the central bank plans to begin testing the digital ruble in April 2023, while the exchange of the CBDC for foreign currencies and the creation of digital wallets for non-residents will occur in 2024.
Source: Google Images
Reports coming out of Russia show that crypto users have taken to the physical exchange of crypto for fiat on the streets of Russia due to the shortage of cash in the system. This has made stablecoins, despite efforts by the European Union (EU) to limit the access of cryptocurrencies to Russians, the de facto substitute payment option for many.
Native crypto exchange : Russian Crypto Exchange Will Not Promote Crypto Use in Russia: Officials
An unnamed official commenting on the topic said that the State Duma committee was discussing a regulatory framework and “reinforced concrete arguments for supervisory authorities.”
Meanwhile, another draft amendment to the Digital Financial Assets legislation bans the advertisement of digital assets in Russia but legalizes the mining of digital currency in the nation.
That said, the speculation on the ground is that the proposed Russian crypto exchange will only be used to declare and convert digital currencies, a move that could boost inflows for the sanctions-riddled Russian economy.
Russia Eyes Embracing Crypto for Cross-Border Settlement
Russia’s affinity for crypto has lifted over the past few months. What was once a consideration to use cryptocurrencies like Bitcoin and Ethereum to subvert sanctions to some degree on the national scale, Russia has now taken concrete steps to legalize the use of cryptocurrency for cross-border settlements. In late September, the Central Bank of Russia (CBR) announced that it had reached an agreement with the Ministry of Finance to make this possible.
Speaking at an interview some months ago, Ivan Chebeskov, the director of the Financial Policy Department for the ministry, explained: “We are going to allow international settlements in cryptocurrencies for any industry without restrictions.”
The European giant also aims to use this move to improve payments within the country and boost tax revenue from crypto wallets within its jurisdiction. Speaking on the matter, Aleksey Moiseev, Russia’s Minister of Finance, said the move will help the country stay in touch with the development of the rest of the world. Moiseev explained:
“Now people are opening crypto wallets outside the Russian Federation. It is necessary that this can be done in Russia, that this is done by entities supervised by the Central Bank, which are required to comply with the requirements of anti-money laundering legislation and, first of all, of course, to know their client.”
Final Word
Putin’s comments at the Sberbank-organized conference show that the Russian president has his eye on making Russia more open to crypto and blockchain technology.
That said, making cryptocurrency a recognized means of settlement for cross-border payments will go some way toward helping Russia circumvent the sanctions hanging around its neck.
