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Russian Central Bank Agrees to Legalize Cryptocurrency for Cross-border Payments: Report

05 Sep 2022 By: Rohit Khandelwal
Russian Central Bank

The Bank of Russia, the country's central bank, has apparently acknowledged that cross-border crypto payments are unavoidable in the present geopolitical conditions.

According to a local news source, the Russian central bank has been reconsidering its approach to regulating cryptocurrency and has reached an agreement with the finance ministry to legitimize cryptocurrency for cross-border payments.

Deputy finance minister Alexei Moiseev reportedly said the Bank of Russia and the Finance Ministry intends to legalize cross-border crypto payments soon.

Moiseev emphasized the need of empowering local crypto services in Russia, saying that many Russians use foreign platforms to establish a crypto wallet. It is necessary to do this in Russia, involving businesses supervised by the central bank and required to comply with Anti-Money Laundering and Know Your Customer regulations, the official stated.

Historically, Russian lawmakers have been hostile to the use of cryptocurrencies as a payment mechanism. In 2020, Russia passed the On Digital Financial Assets Act, which legally barred the use of cryptocurrencies such as Bitcoin (BTC) for payment purposes. The Bank of Russia has been cautious about cryptocurrency payments because it aims to defend the Russian ruble as the country's sole legal currency.

In late 2021, the notion of crypto payments for national trades in Russia surfaced. Then, Russian President Vladimir Putin stated that it is "still premature" to utilize cryptocurrency to exchange natural commodities such as oil and gas.

The situation appears to have altered as a result of Western economic sanctions imposed in response to Russia's invasion of Ukraine. In May, Russia's Minister of Industry and Trade stated that crypto payments will be legalized sooner or later. Elvira Nabiullina, governor of the Bank of Russia, subsequently said that crypto can be used for cross-border payments, but only if it does not enter Russia's domestic financial system.

Moiseev claims that the central bank has reconsidered its approach to regulating the business in light of the changing circumstances. He went on to say that the proposed infrastructure is too restrictive for the use of cryptocurrencies in cross-border payments. Which, he reasoned, must be legalized in some way.

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