Russia has announced its strategy to develop a legal system for crypto in a move to integrate crypto in its international commerce and to avoid Western sanctions.
Russia's Ministry of Finance and Central Bank have formally agreed to legalise cryptocurrency in order to settle international trade deals. This initiative is expected to formalise the experimental legal regime (ELR) launched in September, which initially permitted the process of piloting crypto for cross-border transactions.
Following this announcement, this decision represents a strategic response to Western sanctions, as the process of establishing a legal system for cross-border crypto payments will enable Russia to bypass restrictions on traditional banking channels.
More information on Russia’s strategy to develop a legal system for crypto
According to beincrypto.com, the move is viewed as a strategic initiative to provide Russian businesses with an alternative payment channel in order to ease the overall strain caused by Western sanctions on the country's access to traditional global banking. At the same time, the new legislation is expected to be accompanied by strict regulation and optimised oversight. According to the Finance Minister, despite the strategic goal of sanctions relief, regulators are set to remain intensely focused on the process of controlling the financial risks associated with decentralised cryptocurrencies.
Furthermore, proposed oversight measures are expected to include stringent Anti-Money Laundering (AML) and Know-Your-Customer (KYC) standards that will be enforced by the Federal Financial Monitoring Service. Meanwhile, all crypto payments and transactions will be processed through a regulated infrastructure under the direct supervision of Russia’s Central Bank. The new legal framework is expected to only apply to foreign trade settlements and maintain the ban on using cryptocurrency for domestic payments within Russia, as regulators designed this core policy in order to protect financial stability.
This new framework aims to allow Russia to conduct cross-border transactions through a sanctions-proof alternative, while also facilitating trade with regions like China, India, and Turkey, which have not joined the Western sanctions regime.
