Russia considers permanent legalization of stablecoins to facilitate cross-border payments

The Russian government is considering regulating the entire circulation process of stablecoins, including the domestic transfer, accumulation and use of these assets in cross-border payments.

According to "Izvestia" citing the Russian Central Bank on July 3, the Russian government is considering officially legalizing stablecoins for international transactions in order to simplify cross-border payments for Russian companies while sanctions continue.

It is reported that the Central Bank of the Russian Federation is actively evaluating a proposal to allow the use of crypto-assets pegged to stable-value assets such as the U.S. dollar or gold, which are relatively less volatile and more stable than other cryptocurrencies.

Stablecoins or potential solutions to sanctions responsestrategy

Alexey Guznov, deputy chairman of the Central Bank of Russia, confirmed the government’s plan to bring stablecoins into the regulatory system and emphasized the importance of regulating the entire process from domestic transfers and accumulation of assets to cross-border payments. He further explained that this measure is intended to be a long-term regulation, not a short-term experiment. Guznov also mentioned that although stablecoins have something in common with digital financial assets (DFA) and other cryptocurrencies, due to their unique attributes and popularity, the existing regulatory framework needs to be appropriately adjusted.

The report points out that stablecoins show great potential as a means of international settlement, especially in transactions with the BRICS countries (Brazil, Russia, India, China and South Africa). Therefore, some experts believe that stablecoins can inject a large amount of liquidity and long-term funds into the market. At the same time, the Russian Union of Industrialists and Entrepreneurs (RSPP) also believes that stablecoins are a key tool to enhance cross-border transaction capabilities in the face of Western sanctions.

In March 2024, Russian President Vladimir Putin signed a law allowing DFA to be used for international payments. However, due to concerns about possible secondary sanctions, the implementation of this law has not yet been fully implemented. At the same time, due to limitations in convertibility and liquidity, Russia’s DFA is currently not compatible with the global crypto market, which limits its application in international payments.

Limitations and potential of stablecoins in Russia

Stablecoins have become extremely popular in global transactions. According to data, the transaction volume in the first quarter of 2024 reached US$6.8 trillion, which is comparable to the transaction volume in the whole of 2022. However, in Russia, the use of stablecoins is currently limited to specific plans of a few companies, especially transactions with China.

Experts believe that in order for stablecoin trading to proceed smoothly, a clear regulatory system and solid infrastructure need to be established. This involves setting clear rules for the cryptocurrency and mining industry to ensure the legality and transparency of transactions.

If Russia legalizes stablecoin payments, it will be more widely used by Russian businesses, including state-owned enterprises, which will simplify transaction processes and comply with tax regulations.

However, the EU recently implemented a new round of sanctions banning European organizations from using Russia's Financial Information Transfer System (SPFS), which is reported to be an alternative to SWIFT. In addition, Russia plans to disconnect from SWIFT in 2022, making the development of alternative payment mechanisms particularly urgent.

Stablecoins offer a possible solution that can help address these challenges by bypassing traditional financial systems such as SWIFT.

Conclusion:

Amid the uncertainty of the global economy, the Russian government is actively embracing financial innovation and exploring the supervision and legalization of stable coins to cope with the challenges of the international payment system. This move not only shows Russia's strategic response to economic sanctions, but also reflects its determination to enhance the autonomy of the financial market.

With the gradual improvement of the regulatory framework and the construction of infrastructure, stablecoins are expected to establish a formal status in the Russian financial system and provide enterprises with efficient and low-cost cross-border payment solutions. This move will not only help Russian companies expand their international business, but may also provide new impetus for the development of global financial technology and open a new era of cross-border payments.

The above is the detailed content of Russia considers permanent legalization of stablecoins to facilitate cross-border payments. For more information, please follow other related articles on the PHP Chinese website!