Russia defies sanctions with crypto for cross-border transactions

Russia will use crypto as cross-border transactions

While US regulators have continued to view cryptocurrency as a major threat, other countries, such as Russia, are beginning to take into account the technology’s potential while experimenting with its potential.

In recent years, sanctions have become an increasingly common tool countries use to exert pressure on their political rivals. The impact of these measures has been significant for Russia, as several rounds of economic sanctions have been targeted against it in response to the invasion of Ukraine.

But despite its challenges, Russia is now looking to use cryptocurrency to help it circumvent these restrictions and conduct cross-border transactions.

Crypto as a tool for cross-border transactions across national borders

At a recent conference, Deputy Finance Minister Alexei Moiseev spoke tired that while cryptocurrency is an “evil” in general, there may be separate situations where it can be used effectively.

In particular, Moiseev pointed to the potential of cryptocurrency in foreign trade activities and noted that a relevant bill is currently being considered by the State Duma’s committee for the financial market.

If the bill is passed, a committee would include representatives from several ministries, the Bank of Russia and law enforcement agencies. This committee will allow individual operators to use cryptocurrency in foreign trade transactions, creating a legal framework for the experiment.

It should be noted that the process of providing a legislation for this experiment may be delayed until the end of the year, according to Moiseev. Nonetheless, the move represents a significant step for Russia in using cryptocurrency to circumvent sanctions and conduct cross-border transactions.

Prior to this news, The Russian News Agency (TASS), the Bank of Russia and the Ministry of Finance of Russia have since February acknowledged that due to the international sanctions imposed on the country to exclude it from the global payment infrastructure that depends on the US dollar, the use of crypto payments is not excluded.

Challenges of using crypto for cross-border transactions

While using cryptocurrency for cross-border transactions offers several potential benefits, significant challenges must also be considered. For example, the volatility of cryptocurrencies such as Bitcoin can make it difficult to accurately assess the value of transactions and can lead to unexpected losses or gains.

In addition, the lack of regulatory oversight in the cryptocurrency industry can create a significant risk of fraud or other criminal activities. This is particularly relevant for cross-border transactions, where it can be difficult to identify and hold bad actors accountable.

Despite these challenges, however, the potential benefits of using cryptocurrency for cross-border transactions are significant. In particular, cryptocurrency can help bypass the limitations imposed by traditional financial systems and allow for faster, cheaper and more efficient transactions.

Russia’s potential use of cryptocurrency for international trade can represent a significant advance for the industry. Although certain risks and challenges are associated with such transactions, the potential benefits are significant enough to make them a viable option for countries looking to circumvent sanctions, conduct other types of international trade, or stay locked in with Russia in terms of adopt new technology.

Meanwhile, have global cryptocurrency The market capitalization has fallen by 3.2%, and the sector’s total market capitalization has fallen below the previously recorded $1.3 billion.

Featured image from Unsplash, chart from TradingView