July 5, 2024
By Sharan Kaur Phillora
Russia’s central bank is reportedly considering the legalization of stablecoins for cross-border transactions, particularly with China. This move comes as Russian businesses seek alternative methods to conduct international trade amid ongoing sanctions.
Here’s what we know:
Alexei Guznov, deputy governor of the Bank of Russia, revealed in an interview with state newspaper Izvestia that the proposal is under active discussion. The central bank aims to regulate the entire process, allowing individuals to transfer, accumulate, and use these digital assets for international payments.
This potential policy change significantly departs from the Bank of Russia’s previous opposition to digital assets. The shift appears to be driven by the pressing need to maintain trade relations with key partners like China, as traditional payment methods face severe limitations due to international sanctions.
Stablecoins, unlike volatile cryptocurrencies such as Bitcoin, are typically backed by assets and have a central issuer. This characteristic addresses some of the concerns that previously led to the central bank’s resistance to digital currencies.
Interestingly, some Russian metal producers have already begun using stablecoins, particularly Tether’s USDT, for transactions with Chinese counterparts. The USDT’s peg to the US dollar makes it a convenient option for exporters.
However, questions remain about how this potential legalization would navigate international sanctions compliance. Tether, a major stablecoin issuer, has recently emphasized its commitment to adhering to sanctions policies, collaborating with blockchain analysis firm Chainalysis to identify potentially risky wallets.
While the timeline for approval remains unclear, Guznov suggested that this initiative could evolve from a temporary experiment to a permanent regulatory framework. This development underscores Russia’s ongoing efforts to adapt its financial system in response to geopolitical challenges and maintain crucial economic ties with partners like China.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
