14 hours Ago By Sharveya Parasnis
Russian companies have begun using cryptocurrencies like Bitcoin for foreign trade, revealed the nation’s Finance Minister Anton Siluanov on December 25. According to a report from Reuters, the government plans to expand the use of cryptocurrencies for international transactions, including Bitcoins mined in Russia. Earlier this year, the Russian government had passed a bill to allow businesses to use cryptocurrencies in international trade.
Under the law, the nation’s central bank would create a new “experimental” infrastructure for cryptocurrency payments. Russia has also begun to regulate cryptocurrency mining and other digital assets. However, cryptocurrency payments within the country still face a ban.
Why This Matters: This development illustrates Russia’s attempts to circumvent sanctions enforced by Western nations. Following the beginning of the war between Ukraine and Russia, the United States and the European Union imposed a number of penalties , including ones aimed at President Vladimir Putin personally. The United States, United Kingdom, and European Union, along with countries including Australia, Canada and Japan, have reportedly imposed more than 19,535 sanctions on Russia, also freezing foreign currency reserves worth 350 billion US dollars.
They have also frozen about 70% of the assets of Russian banks and around 20 billion euros of assets from more than 1,500 sanctioned persons and entities. The EU believes these sanctions to have had a serious impact on the Russian economy and its international trade. The European Commission pegged the value of banned exports to Russia at €48 billion, and that of imports from the country at €91.
2 billion. This includes 90% of EU oil imports from Russia. In March this year, the EU also agreed to cut off several Russian banks from the SWIFT financial transaction processing system, making it difficult for Russian businesses to engage in international trade.
Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a cooperative organisation that provides a messaging network through which international transactions are conducted. Without it, Russian corporations would find it even more difficult to send or receive money from foreign banks. What Would the US Do? Russia’s decision to use Bitcoin to skirt America-led sanctions comes at an interesting time, as Donald Trump re-enters the Oval Office next month.
Unlike soon-to-be former President Biden, who sought to place the industry under greater regulatory scrutiny, Trump is a known supporter of cryptocurrencies. In a speech this year, he promised to “make Bitcoin great again,” and promised to fire Securities and Exchange Commission (SEC) head Gary Gensler, who had taken a tough stance on digital assets. Trump also nominated cryptocurrency advocate Paul Atkins in Gensler’s place.
Would Russia’s use of cryptocurrencies lead to stricter scrutiny of cryptocurrency transactions? Or would Trump ensure that the digital money keeps flowing? This remains to be seen. Also Read: Support our journalism: For You.
