According to early reports, Russia might be moving to legalize stablecoins for international payments to mitigate the impacts of international sanctions and exclusion from traditional financial systems.
Stablecoins To Evade Sanctions
The Russian government is reportedly contemplating legalizing stablecoins for international transactions to facilitate cross-border payments for Russian companies amid ongoing sanctions. This potential move, reported by the Izvestia news service, seeks to address the challenges faced due to exclusion from the SWIFT system.
These stablecoins are pegged to stable currencies or assets like the US dollar or gold. As such, they are supposed to be less volatile than pure cryptocurrencies like Bitcoin or Ethereum, which makes them better suited and lower risk for international transactions.
Central Bank Discussions
The Central Bank of the Russian Federation (CBR) is actively discussing proposals to permit the use of stablecoins. Alexey Guznov, Deputy Chairman of the Central Bank, emphasized the importance of this initiative for simplifying international transactions, particularly with China.
He stated,
“The question is to regulate the entire chain that would allow individuals to transfer these assets to the territory of the Russian Federation, accumulate them here, and use them for cross-border payments.”
Guznov also mentioned that this initiative might lead to permanent regulation rather than a temporary measure. He noted the necessity of fine-tuning the regulatory framework due to the unique characteristics and widespread popularity of stablecoins, which share similarities with both digital financial assets (DFAs) and cryptocurrencies.
BRICS and Independent Payment System
The report suggests that stablecoins could be a promising tool for international settlements, especially for transactions with BRICS countries — Brazil, Russia, India, China, and South Africa. This initiative aligns with Russia's recent decision to adopt China’s yuan as the benchmark for all currency trades within the country.
Furthermore, the BRICS block is rapidly gaining more significance on the international stage. There is even speculation that a common BRICS currency might be developed to facilitate international transactions between these countries. Further reports indicate the ongoing development of a digital currency and blockchain-based independent payment system.
Kremlin aide Yury Ushakov pointed out the significance of such a “Contingent Reserve Arrangement,” claiming,
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people, and businesses, as well as cost-effective and free of politics.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.