One of the primary use cases of crypto is cross-border payments. Most countries have their proprietary payment solutions for local transactions like UPI in India, but there is still a problem with global transactions. Firstly if a country isn’t aligned with the US, they won’t be able to use the SWIFT payment network, which makes cross-border payments even more difficult. And secondly, even if they are part of the network, it involves a lot of dependency on intermediataries and hence a lot of fees. So, the Bank of Russia has acknowledged the problem as it allows crypto use for cross-border payments.
Bank of Russia on cross-border crypto payments
Initially, the central bank of Russia was not very keen on allowing crypto to be used as a payment medium. But the tides have changed now as they acknowledge it is inevitable to avoid crypto in the current geopolitical scenario. So, they are rethinking how to regulate crypto and enable cross-border payments. The deputy finance minister of the Bank of Russia, Alexei Moiseev, said that the bank and finance ministry are going to make it happen soon.
Considering that Russia and US are strong enemies right now and Russia has been cornered with a lot of sanctions, the only option left is to choose an alternative payment medium. They have already started doing so by trading with countries using their local currencies like the Chinese Yuan.
For Russia, there is also the need for local platforms which will be easy to track and regulate. The authorities will also find it easier to apply AML and KYC rules on local platforms.
Changed outlook of Russian authorities
Considering the fact that Russia has been against crypto payments since 2020, this change of heart comes as a surprise. But it also makes a lot of sense due to the current situation they are in. There have been a lot of hints that Russia is taking its time to enable cross-border payments, and it is finally happening. It means they can now bypass the US sanctions with the use of cryptocurrencies while doing international trade.
What are your thoughts as the Bank of Russia allows crypto use for cross-border payments? And do you think this will help the crypto industry? Let us know in the comments below. And, if you found your content informative, do share it with your family and friends.
Also Read: IMF says crypto has stronger potential as a payment method against weak currencies.
