U-turn on cryptos

That’s how times change: As recently as January, the Russian central bank had proposed a general ban on local crypto trading and mining. The reason given was financial stability risks, whereby a war always carries a certain stability risk. Therefore, the central bank has now admitted to having taken a too aggressive stance towards cryptocurrencies – bank governor Elvira Nabiullina cites the economic sanctions imposed on Russia as the main reason for the change of heart.

This was preceded by differences of opinion between the central bank and the finance ministry – while the central bank would have preferred to ban cryptos, the ministry took a more pragmatic approach and called for regulation including taxation. A few months later, the country finds itself in a situation of isolation and is looking for ways out of the blockade. Cryptocurrencies are particularly suitable as a means of international payment transactions – after all, Russia was locked out of the SWIFT system.

No SWIFT? Bring on the cryptos!

At the end of May, the deputy head of the central bank, Ksenia Yudayeva, confirmed that the central bank is now open to the use of cryptocurrencies for international payments. This seems only logical in terms of its isolation from the global network. Not only Russia, but also its citizens abroad are cut off from their money. The latter have already reacted in the short term and jumped on the crypto bandwagon, but the somewhat more cumbersome central bank has also reacted quickly by its standards. Yudaeva: “We have changed our position on mining and also allow the use of cryptocurrencies for foreign trade.”

Cryptocurrencies for foreign trade

However, the central bank’s official statement on this change of attitude has not been made public – whether out of shame over the about-face or to buy time remains open. The Russian Ministry of Finance is said to have already submitted the final draft law on the regulation of cryptocurrencies, which provides for the relevant licences. In particular, the use of cryptocurrencies for foreign trade is a huge innovation in the revised draft – the Ukraine conflict in mind and the accompanying financial sanctions in mind a logical step and financial liberation blow.

Who wants with me?

For Russia, the only question now is how to conduct transactions with its international trading partners, since the use of alternative means of payment is a violation of the sanctions. One can be curious about Russia’s ingenuity….

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