Russia reconsiders stance on use of digital assets after past bans

Russia’s central bank appears to be softening its stance on its citizens’ use of virtual currencies for cross-border payments. The Bank of Russia said it was necessary to consider digital assets for cross-border payments, given the current geopolitical conditions in the region.

Russia has been embroiled in a military conflict with Ukraine since February, forcing the Group of Seven (G7) countries to respond with sanctions. On top of that, Moscow has been threatened with expulsion from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) international payment system, making it difficult for citizens to settle foreign transactions.

Given the current climate, the Bank of Russia and the Ministry of Finance are turning their attention to virtual currencies with plans to legalize their use for cross-border transactions, according to the local news agency. CASS. Finance Deputy Alexey Moiseev told Russia-2 TV that the two institutions agreed that “it is impossible to do without cross-border cryptocurrency settlements.

“I can say that the central bank has also rethought [the approach]taking into account that the situation has changed, and we are rethinking it,” said Moiseev.

He added that in the process of granting legal status to digital assets, special attention should be paid to preventing their misuse by malicious actors in money laundering and drug trafficking. Moiseev says the current regulatory regime needs to be improved to accommodate legalization.

The Deputy Minister noted the tendency of Russian citizens to use foreign platforms to trade digital assets, arguing that it is necessary for entities supervised by the Central Bank to be in charge of the process to ensure full compliance with the requirements in in the fight against money laundering.

A series of bans for virtual assets in Russia

In the past, the Russian government has made no secret of its aversion to this asset class and has adopted several declarations prohibiting their use. In 2020, the country passed a groundbreaking “digital financial assets” law that banned digital currencies as a payment mechanism.

Last year, the country had widespread optimism about legalizing the asset class, but President Vladimir Putin dashed those high hopes. He described them as premature for trading commodities like oil and gas.

Tougher sanctions prompted the Ministry of Industry and Commerce to soon announce the legalization of digital currencies in local payments, but stressed that Russia’s legislative chambers must first wade through the troubled waters of a regulatory framework. .

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