August 28, 2024
By Anjali Kochhar
Russia is extending its strategy to circumvent international sanctions by announcing the creation of two new cryptocurrency exchanges to facilitate overseas payments. According to Russian news agency Kommersant, these exchanges will focus on developing stablecoins tied to the Chinese yuan and a BRICS currency basket. The project primarily aims to assist importers and exporters, with initial involvement limited to individuals.
In late July, Russia enacted legislation allowing cryptocurrency exchanges to operate under an experimental legal regime (ELR) developed by the central bank. This move is expected to streamline the use of stablecoins—cryptocurrencies backed by assets—over volatile, un-backed cryptocurrencies, aligning with the central bank’s objectives.
The Kommersant article mentioned that one of the planned exchanges might involve the Moscow Exchange, while the other could utilise the St. Petersburg Currency Exchange (SPCE) database for foreign economic activities. However, the SPCE has strongly denied any involvement, with Interfax reporting a rebuttal from the exchange. Despite this, using the SPCE database could be logical due to its detailed records of importers and exporters.
The Moscow Exchange, which previously handled currency trading, has faced restrictions since June following its inclusion on the OFAC sanctions list, halting trades in dollars and euros. Despite the denial by SPCE, the involvement of the Moscow Exchange in stablecoin trading remains plausible due to its expertise in financial data.
The situation is complicated by the presence of two similarly named entities: the Saint Petersburg Currency Exchange (SPCE), also known as SPCEX or SPVB, and the Saint Petersburg Stock Exchange (PJSC SPB). The latter was sanctioned by OFAC in November 2023. While the SPCE’s status remains ambiguous, it is believed to be controlled by the state-owned Promsvyazbank, which has also been sanctioned.
As Russia considers using Chinese currency stablecoins, concerns arise concerning the assets supporting these stablecoins and China’s ability to conduct transactions through its own exchanges, maybe via Hong Kong. The bigger question is whether stablecoins may serve as a temporary bridge for local currency transfers within the BRICS framework.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
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