Russia introduced a significant legal shift by allowing the use of cryptocurrency for foreign trade settlements. This move marks a notable step towards integrating digital assets into the country’s financial system, though full regulation of this activity remains pending.
Experimental Legal Regime to Test Cryptocurrency Payments
Anatoly Aksakov, Chairman of the State Duma Financial Market Committee, has announced that the Central Bank and the Ministry of Finance are collaborating on drafting bylaws to govern cross-border cryptocurrency payments. These regulations are expected to be finalized by the end of November.
In the interim, the Russian government will implement an experimental legal regime (EPR) to test the cryptocurrency payment mechanism. This phased approach will initially involve a limited number of participants, such as credit organizations and banks, to manage risks and develop effective regulations aimed at protecting the market from fraud.
Aksakov noted that companies are already leveraging cryptocurrency for import and export transactions, with volumes estimated in the billions of dollars. The initial restriction to a select group of financial institutions is intended to facilitate a controlled environment for regulation and market understanding.
Focus on Safeguarding and Regulation
Aksakov emphasized the importance of safeguarding the market against dishonest actors, noting that cryptocurrencies are not only used for legitimate trade but have also been associated with illicit activities, including the purchase of weapons and drugs. The regulations will focus on restricting digital assets to foreign trade activities only, with no plans to recognize cryptocurrencies as a means of domestic payment.
“It’s crucial to restrict the use of digital assets solely to foreign trade transactions,” Aksakov said. “Cryptocurrency should be regulated similarly to foreign currencies, but it will not be permitted as a domestic payment method.”
Regulatory Framework and Future Expansion
The Central Bank and the Ministry of Finance are working on bylaws that will outline the rules for cross-border crypto payments and define the criteria for participating individuals and organizations. Initially, the scope of participants will be limited, but the regulations will evolve to accommodate a broader range of entities and new trading platforms over time.
Previously, there have been disagreements between the Central Bank and the Ministry of Finance regarding the establishment of cryptocurrency exchanges within Russia. Bloomberg sources have suggested that cryptocurrency transactions for cross-border payments may be integrated into Russia’s MIR payment system, further shaping the regulatory landscape.
Conclusion
Russia's new law permitting cryptocurrency for foreign trade settlements represents a pivotal moment in the country’s financial regulation. While the full regulatory framework is still in development, the initial experimental phase will provide valuable insights into managing digital assets in international trade. By restricting the use of cryptocurrencies to foreign transactions and maintaining tight controls, Russia aims to balance innovation with market protection, positioning itself as a key player in the evolving global digital economy.
September 2024, Cryptoniteuae