Russia to Trial Crypto Payments for Military-Related Imports: Report

2024-09-17 03:21:38

Cryptocurrency Russia

Russia authorizes crypto payments for international trade to bypass sanctions, forming a focus group to trial payments for imports of goods with potential military applications. Last updated:

September 17, 2024 07:21 EDT

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Hassan Shittu

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Hassan Shittu

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Last updated:

September 17, 2024 07:21 EDT

Why Trust Cryptonews With over a decade of crypto coverage, Cryptonews delivers authoritative insights you can rely on. Our veteran team of journalists and analysts combines in-depth market knowledge with hands-on testing of blockchain technologies. We maintain strict editorial standards, ensuring factual accuracy and impartial reporting on both established cryptocurrencies and emerging projects. Our longstanding presence in the industry and commitment to quality journalism make Cryptonews a trusted source in the dynamic world of digital assets. Read more about Cryptonews The Russian government has formed a focus group to explore crypto payments for foreign trade under an experimental legal regime (EPR). The country established the group, which consisted of select importers and banks.

This follows a law allowing the use of cryptocurrency for foreign trade settlements that came into effect in Russia, though its activity is still awaiting full regulation.

Russia’s New Initiative to Tackle Payment Challenges for Dual-Use Goods

According to a Report by Vedomosti on September 17, the initiative aims to address the payment challenges faced by importers handling dual-use goods, which have both civilian and military applications, and are subject to international restrictions.

The government formed the group for foreign trade, focusing on importers of goods with potential military applications.

The focus group consists of importers from the Russian Chamber of Commerce and Industry (CCI), the Association of Developers and Producers of Electronics (ARPE), and several banks.

Whether foreign financial institutions are involved remains unclear, but the initiative focuses on importers who deal with sensitive transactions for banks in China and other nations.

The focus group primarily includes importers dealing with dual-use goods, which include items that can be used for both civilian and military purposes. Thus, international payments are more challenging.

The focus group participants were selected based on their business turnover, with priority given to larger companies in this experimental phase.

While plans to expand the group and include more participants are in place, the timeline for scaling the experiment remains uncertain.

From Yuan to Tether: How Russia is Navigating Sanctions with Cryptocurrency

Following China’s ban on unregulated civilian drones, effective September 1, Russia has intensified efforts to adopt cryptocurrency for foreign trade payments. The use of drones in military operations has made their trade more sensitive, adding to the complexity of international transactions.

Russia’s move to crypto payments comes in response to U.S. sanctions and fears of secondary sanctions, which have impacted traditional trade channels.

Reports indicate that Russia’s largest unsanctioned metal producers have begun using Tether (USDT) for cross-border transactions with Chinese partners, bypassing restrictions tied to the U.S. dollar and even the yuan.

Since the imposition of SWIFT sanctions days after Russia invaded Ukraine, the Kremlin has struggled to settle trade deals using the yuan. Chinese counterparties have increasingly refused to accept payments due to fears of U.S. sanctions, resulting in about 80% of yuan-denominated payments being returned to Russia.

To address these issues, Russia enacted a law on September 1 permitting cryptocurrency for foreign trade, although full regulation is still pending.

Anatoly Aksakov, Chairman of the State Duma Financial Market Committee, stated that the Central Bank and Ministry of Finance are drafting bylaws to define cross-border crypto payment rules.

These regulations, expected by November, will initially limit participation to select financial institutions to protect the market from illicit activities such as arms or drug trading.

Aksakov emphasized that cryptocurrency will only be used for foreign trade, not domestic payments, and the process will be tightly regulated to safeguard economic integrity.

He also noted that Russian companies are already using crypto for trade, with transactions reaching billions of dollars.

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