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Russia is considering embracing crypto for international payments to help counter the impact of western sanctions.
Ivan Chebeskov, the Head of the Financial Policy Department under the Ministry of Finance, said the Russian government is actively discussing the idea of using cryptocurrencies for international settlements.
According to Chebeskov, allowing crypto as a means of settlement for international trade would help counter the impact of Western sanctions, which have limited Russia’s access to traditional cross-border payment mechanisms.
Meanwhile, Russian regulators are actively grappling with reining in the country’s crypto market and the use of digital currencies. Notably, the Central Bank and the Finance Ministry have varying approaches to regulating the crypto space.
The Central Bank proposes implementing an outright ban on crypto trading and mining, claiming the activities threaten Russia’s financial stability. On the other hand, the Finance Ministry suggests creating rules that distinguish white and gray markets.
While the government seeks to start using crypto for payments, the Central Bank and Finance Ministry must first reach a consensus on how to regulate the crypto space. Discussions have been going on for months, but they are yet to bear fruit.
Russia’s economy continues to decline amid Western Sanctions
Russia’s consideration of crypto as a means of payment comes as its economy continues to decline. The decline is a result of western sanctions, which the U.S. and EU imposed on the country after it attacked Ukraine.
While the country hopes to use crypto to counter the impact of western sanctions, Changpeng Zhao, the CEO of Binance, said Russia cannot use crypto to evade sanctions. According to him, crypto is too traceable, a characteristic that makes digital currencies unsuitable for circumventing sanctions.
While crypto exchanges have vowed not to bar all Russians from using their platforms, they recently tightened clampdowns. For instance, Binance announced it would restrict services to Russian individuals and entities that hold cryptos exceeding $10,885. Coinbase also said it would shut down some Russian accounts due to the sanctions.