Daily Management Review

Russian Regulator Promotes Cryptocurrency Use As A Means Of Evading Sanctions


In order to offset Western sanctions imposed over the Ukraine crisis, Russia's central bank advised enterprises to adopt "multiple choice solutions" to enable payments with overseas partners, including cryptocurrency and other digital assets.
The previous few weeks have seen significant losses for Russia's once-burgeoning commerce with China, India, the United Arab Emirates, Turkey, and other nations that have not implemented sanctions.
Major Russian financial institutions, such as the Moscow Stock Exchange and Russia's national substitute for the global payments system SWIFT, have been singled out by recent Western sanctions.
The head of the central bank, Elvira Nabiullina, acknowledged that one of the main issues facing the Russian economy was payments.
"New financial technology creates opportunities for schemes which did not exist before. This is why we softened our stance on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments," Nabiullina told a financial conference in St.Petersburg.
"Different alternatives are being discussed. Businesses have become very flexible, very enterprising. They find ways to solve this and often don’t even share them with us," she said.
Nabiullina said that there was "tremendous pressure" on Russia's commercial partners around the world, but she also predicted the eventual emergence of a new global payments system independent of Western institutions since many nations felt unsafe relying solely on one system and having no other options.
According to Nabiullina, talks about the BRICS Bridge payments system, which would connect the financial systems of participating nations, were now taking on between Russia and other BRICS members.
However, she emphasised that the talks were challenging and that developing such a system would take time.
Sitting next to Nabiullina, Andrei Kostin, the head of VTB, the second-largest lender in Russia, announced that any information regarding the mechanisms that facilitate international payments should be legally protected as a "state secret" due to their sensitivity. VTB recently faced sanctions on its branch in Shanghai.
"I can see very clearly that a second secretary is sitting someplace in the U.S. embassy right now, taking notes on everything we say in public. Perhaps he's even seated here. Regardless of the actions we take, we can observe that the response [from Western nations] comes very quickly," he stated.