Russia turns to cryptocurrency for cross-border settlements amid sanctions—here’s why

At the “Banks. Transformation. Economy. 2.0” conference in Moscow, Russia’s Deputy Finance Minister, Alexey Moiseev, spoke about the potential use of cryptocurrencies in foreign trade activities currently hindered by Western sanctions. Moiseev revealed that the State Duma, Russia’s lower house of parliament, is considering a draft law to regulate the matter.

Moiseev acknowledged the risks associated with cryptocurrencies, stating: “Of course, crypto is generally evil. I believe that people who invest their savings there take a very big risk… But there may be individual situations in which crypto can be used.”

Cryptocurrency transactions experiments planned

Moiseev explained that if the bill is adopted, experiments would be conducted with a committee comprising representatives from various ministries, the Bank of Russia, and law enforcement agencies. This committee would grant permission for specific operators to use cryptocurrencies in foreign trade transactions.

The deputy finance minister noted that the legislative process required to establish a legal foundation for the trials might not begin until the end of the year. Lawmakers and government representatives have long debated Russia’s regulatory approach to cryptocurrencies.

Adapting to sanctions with cryptocurrency

State institutions have recognized the need to use cryptocurrency for cross-border settlements in response to increasing Western sanctions following Russia’s invasion of Ukraine. Although most decentralized cryptocurrencies are not yet legalized for domestic transactions in Russia, they are allowed for international payments under special legal regimes yet to be established. This change in perspective underscores the growing relevance of cryptocurrency amidst geopolitical tensions.