According to a senior slope official, Russia is open to using cryptocurrencies for global payments. First Deputy Governor Ksenia Yudaeva said in a sign of a possible relaxation of its opposition to digital currencies.
In principle, we do not object to the use of cryptocurrency in international transactions.Ksenia Yudaev, First Deputy Governor of the Central Bank of Russia.
However, Yudaeva emphasized that the bank, as the regulating authority, considers cryptocurrency’s wider use in Russia to be a financial risk.
Russia runs out of options for International trades
Russia is researching the possibility of using various digital assets to conduct international transactions. The country is presently looking for ways to circumnavigate economic penalties as a result of its invasion of Ukraine in January.
The Russian government may not desire its citizens to trade in virtual currencies, yet the country’s central bank is running out of alternatives for global commerce and payments. Russia is trying to figure out how to regulate its crypto market and the usage of virtual currencies, with the central bank previously proposing a nationwide ban.
The Russian finance ministry said that allowing cryptocurrency to be utilized to settle international transactions will assist the country to counter the impact of Western sanctions, which were imposed following Moscow’s deployment of tens of thousands of troops into Ukraine and have cut numerous Russian banks off from the global financial network.
Yudaeva claimed that the overall risks to the country’s financial stability as a consequence of Western sanctions imposed on Russian lenders had decreased due to banks’ increased foreign currency liquidity.
Crypto for government but not for citizens
Central banks generally frown on decentralized digital assets because they undermine their level of control over a country’s finances. In addition, they can compete with any central bank digital currency (CBDC) projects that are under development. Again, it’s all about control, as a CBDC will give banks a lot more leverage over what people can and can’t do with their money.
Central banks are generally opposed to decentralized digital currencies because they jeopardize their financial authority. They may also compete with any central bank digital currency (CBDC) projects that are currently in development.
Ksenia Yudaeva cited user risk in her stance on crypto for its citizens saying that they still believe the active use of cryptocurrencies within the country particularly within the country’s financial infrastructure poses great risks to citizens and users.
The finance ministry’s Yudev stressed to the media that Russian financial stability was better than it had been, adding that Western sanctions had reduced the risks to financial stability.
The country’s central bank had previously called for a complete ban on cryptocurrency, but it is fine to use cryptocurrencies to get around sanctions. Regular Russians are still waiting for a decision on whether their assets will be classified as a financial instruments or not. Last week, the Ministry of Finance stated that the usage of cryptocurrency for international settlement transactions was being seriously considered.
Mixed signals in the crypto ecosystem
A central bank digital currency (CBDC) would give banks more power over what people can and cannot do with their money. However, contrary to the report, Russia’s Central Bank wants stock exchanges to support crypto trading according to news reported recently. During a recent gathering of brokers, exchanges, and information system operators in the country, the country’s central bank suggested this. These are organizations with which crypto platforms interact.
Denis Manturov, the Minister of Industry and Trade of the Russian Federation, recently stated that bitcoin and other cryptocurrencies will be legalized in the country soon. Manturov is certain that bitcoin’s legality will occur sooner or later because the worldwide market is presently experiencing a cryptocurrency craze.
So there are definitely mixed signals about what the Russian government’s stance is on cryptocurrencies. While it appears that they want to get involved with the ecosystem, they also want to control it.
This is a common theme with many governments around the world. They see the potential of blockchain technology and digital assets but are worried about losing control. It will be interesting to see how this unfolds in Russia and if they can strike a balance between the two.