Russia Considers Cryptocurrency for International Payment Following Sanctions

The Russian Federation is currently considering the use of cryptocurrency for international payments in response to western sanctions imposed on the country for invading Ukraine on February 24, 2022.

On February 28, 2022, the United States issued a directive that prohibits transactions involving the Central Bank of the Russian Federation.

The directive reads in part “Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) prohibited United States persons from engaging in transactions with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation. This action effectively immobilizes any assets of the Central Bank of the Russian Federation held in the United States or by U.S. persons, wherever located.”

The Head of the Financial Policy in the Russian Finance Ministry, Ivan Chebeskov, is to put into consideration the possibility of incorporating cryptocurrency payment methods.

“The idea of using digital currencies in transactions for international settlements is being actively discussed,” he said.

The finance ministry of the country is also considering adding an updated version of the cryptocurrency law for international payments though the law is still under construction.

According to Trade Minister Denis Manturov, Moscow plans to legalize crypto payments “sooner rather than later.” In April, the country’s Finance Ministry supported legalization in a bill titled “On Digital Currency.” Apparently, support for cryptocurrency legalization seems to be coming from segments of the Russian government.

The governor of the Bank of Russia, Elvira Nabiullina admitted that the central bank was reconsidering its hostile stance toward digital assets. The governor said that crypto is being considered among several measures to mitigate the impact of Western sanctions against the Russian economy.

However, the head of policy for the U.S.-based Blockchain Association, Jake Chervinsky explains that regardless of the payment system Russia is trying to put in place the SDNs exist. He tweeted “US persons around the world are cutting ties with Russian SDNs right now, regardless of what payment systems they were using previously. There’s zero reasons to think crypto’s existence will convince any of them to willfully violate sanctions laws, risking fines & jail time”.