Russia to consider possible legalization of cryptos for cross-border payments

Russian news agency TASS has reported that Aleksey Moiseev, the Deputy Minister of Finance, said in an interview that the Ministry of Finance and the Bank of Russia have agreed that in current conditions, “it is impossible to do without cross-border settlements in cryptocurrency.” In the near future, it may even be necessary to legalize cross-border settlements in these currencies, he claimed.

Moiseev said that the central bank has re-thought its approach to the digital asset class. Cryptocurrencies need to be legalized and controlled so that there is no usage for money laundering, drug sales etc.

He added that as people open crypto-wallets outside the country, it is necessary that this is done by entities in Russia regulated by the central bank. In such a way, regulations related to anti-money laundering and client information would also be adhered to.

Russia’s approach to cryptocurrency evolving with time

Russia’s approach to the digital asset class has evolved with time. The central bank was not in favour of introducing cryptocurrency as it wanted the native currency Ruble to be the only legal tender in Russia.

In an October 2021 interview with CNBC, President Vladimir Putin said that cryptocurrencies can act as a unit of account, but they are very unstable. Cryptocurrency works for transferring funds from one place to another, but in terms of trading, especially when it comes to energy resources, it is still premature in my opinion. He, however, said that “everything evolves” and “has the right to exist,” adding that the Russian government is closely monitoring the cryptocurrency market.

In July 2022, the Russian Parliament, under the leadership of President Putin, legislated a law that restricted the usage of digital financial assets (including cryptocurrencies) as mode of payments.

In August 2022, it was reported that the central bank is working on its own native digital currency, CryptoRuble, and plans to introduce it in the country in a few years. Its apprehensions about other cryptocurrencies, however, remain.

Here, it’s worth pointing out that Russia’s approach to cryptocurrency has softened with time. Prime Minister Mikhail Mishusti said in a session in August 2022 that adopting digital assets (including cryptocurrencies) is necessary as a “safe alternative” for uninterrupted cross-border payments for goods supply.

In May 2022, Trade Minister Denis Manturov said that Russia will legalize crypto-payments sooner or later.

“The question is when this will happen, how it will happen and how it will be regulated. Now both the Central Bank and the government are actively engaged in this,” he said.