Source: cryptoslate
Compiled by: Blockchain Knight
The Russian government is considering formally legalizing stablecoins for use in international transactions to simplify cross-border payments for Russian companies amid ongoing sanctions, Izvestia reported July 3, citing the Russian Central Bank.
Reports say that the Central Bank of the Russian Federation (CBR) is actively discussing proposals to allow the use of these crypto assets, which are pegged to stable currencies or assets such as the U.S. dollar or gold, making them less volatile than other crypto assets.
Alexey Guznov, deputy chairman of the Central Bank of Russia, confirmed the move and stressed that the main focus is on regulating the entire transaction chain, from the transfer of these assets to Russia to their accumulation and use for cross-border payments.
Guznov said this will likely become a permanent regulation rather than a temporary experiment.
He noted that while stablecoins have similarities with digital financial assets (DFA) and Crypto assets, fine-tuning the regulatory framework will be crucial due to their uniqueness and widespread popularity.
Stablecoins are seen as a promising international settlement tool, especially in transactions with the BRICS countries, which include Brazil, Russia, India, China and South Africa, the report said.
Experts believe that these assets can provide a lot of liquidity and long-term resources to the market. The Russian Union of Industrialists and Entrepreneurs (RSPP) also believes that stablecoins are an important tool to strengthen cross-border transactions in the face of Western sanctions.
In March 2024, Russian President Vladimir Putin signed a law allowing the use of DFA for international payments. However, this process has not yet been fully implemented due to concerns about secondary sanctions against foreign companies.
Furthermore, Russia’s DFA is currently incompatible with global crypto asset markets, limiting its use in international payments due to convertibility and liquidity issues.
Stablecoins have become a popular tool for global transactions. In the first quarter of 2024 alone, the total value of stablecoin transactions reached $6.8 trillion, almost equivalent to the transaction volume for the whole of 2022.
However, in Russia, the use of stablecoins is currently limited to individual corporate initiatives, with companies mostly using stablecoins to conduct transactions with China.
Experts stressed the need for a clear regulatory framework and strong infrastructure to support stablecoin trading, including determining the "rules of the game" for crypto assets and mining to promote legal and transparent operations.
If stablecoin payments are legalized, they could be widely used by Russian companies, including state-owned enterprises, making the process of conducting such transactions more straightforward and compliant.
The EU imposed its latest round of sanctions in June, banning European organizations from connecting to Russia’s SWIFT alternative, the System for Transfer of Financial Messages (SPFS).
Based on the above, and Russia's severance of ties with SWIFT in 2022, the importance of developing alternative payment mechanisms has increased.
Stablecoins offer a potential solution to these challenges by bypassing traditional systems such as SWIFT.
