Russia to start use of crypto for international transactions

Russia to start trials of Crypto payments on September 1, 2024

Starting September 1, 2024, Russia will start the regulated trials for cryptocurrency exchanges aimed at making cross-border payments easier. This move is part of a larger strategy to tackle issues with international payments. The National Payment Card System (NPCS) will be used to manage the crypto payments.

NPCS to be Modified for Cryptocurrency Payments

The National Payment Card System (NPCS), which currently handles ruble-based transactions, will be updated to manage cryptocurrency payments. The Central Bank of Russia will oversee this update. This change is part of Russia's broader plan to lessen the impact of financial sanctions.

Why Russia is Starting Crypto Payment Trials

Russian businesses are struggling to operate internationally due to tough financial sanctions imposed by the U.S. and its allies after Russia's 2022 invasion of Ukraine. Finance Minister Anton Siluanov admitted, "We still haven’t found a solution for this."

Is Crypto Ban in Russia

Initially, the Central Bank of Russia wanted to ban cryptocurrencies altogether. However, the government now sees digital assets as a way to counter these international sanctions, showing a big shift in their current situation.

These trials are part of a bigger effort by BRICS(Brazil, Russia, India, China, and South Africa) nations to reduce reliance on the U.S. dollar for global trade. Known as "de-dollarization," this strategy looks at alternative payment systems, like cryptocurrencies, to reduce U.S. financial influence.

Legalizing Cryptocurrencies for International Payments

On August 8, Russian President Vladimir Putin signed a new law allowing the experimental use of cryptocurrencies for international payments and Forex(Foreign exchange) transactions. The Central Bank of Russia will supervise this process, marking a major change in the country’s approach to digital assets.

Conclusion

Although Russia's Central Bank and finance minister have highlighted efforts to legalize cryptocurrencies, specific details about their use in international trade and the security measures for these transactions are still unclear.

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