Russia is all set to adopt a new bill that will allow transactions to be made in cryptocurrency across borders as it launches a new payment system. It is estimated to be introduced to the public in the 2nd quarter of the financial year 2023-2024. Russian Finance Minister Anton Siluanov declared that no other country would be able to meddle and freeze such crypto payments once the bill is passed.
When will this bill be adopted?
The state Duma of Russia is yet to approve and finalize the bill. However, the chairman of the Russian Duma, Anatoly Aksakov, is quite hopeful that the bill will be adopted soon and that the eligible citizens of Russia will be able to deal in cryptocurrency for cross-border trades when Russia launches a new payment system. The Russian Duma has also implied that a Russian crypto exchange might be set up by June 2023 as they expect to circulate digital currency domestically.
According to the Russian Department of Finance, access to this bill or perhaps the liberty to make payments in cryptocurrency is not only for companies and industries but also for individual businesses. Apart from that, no financial or economic sanctions from the West can forfeit the growth of digital currencies in Russia.
This bill is set to be adopted by the 2nd quarter, but there are some risk factors associated with it. Some debate that this is a gateway for an uncontrolled withdrawal of capital from Russia legally and that taxpayers might get away with not paying taxes on the payments made via cryptocurrency.
Can using crypto for cross-border payments blunt the impact of US Sanctions?
After the Russia-Ukraine War, the President of the United States of America, Joe Biden, administered new sanctions on Russia. These sanctions are a way to keep Russia’s economy in check as this thwarts Russia’s access to any capital that is foreign. But, the Russian Finance Minister claims that no sanction will be able to affect the payments made by cryptocurrencies.
It is known that the Dollar is the global reserve currency that is used in making payments around the world. However, with the advancement in digital currencies, the impact of the US dollar on a global platform is expected to be reduced over the years. Russia allowing crypto payments globally is a step in that direction.
Russia is unable to trade with several countries due to the US sanctions but with digital currency being legalized, businesses around the world will be able to trade with Russian institutions without being detected. This will not only blunt the US sanctions but also have an impact on the global influence of the US dollar.
Can the Digital Ruble be a stepping stone towards De-Dollarization?
The Russian Finance Department is trying its best to find an alternative and minimize the impact of the US Dollar. Thus, the Bank of Russia has been exploring the potential of creating a digital Ruble. Launching a digital Ruble will further minimize Russia’s dependence on the US dollar for international trading and relations.
The Russian Government has been trying to accelerate its efforts of de-dollarization since 2014, and with the international restrictions after the Russia-Ukraine war, this has become a key mission.
The Finance Minister of Russia, Siluanov, expressed at an Educational marathon conference that Russia and China are already using Ruble and Yuan in mutual settlements amongst them. He went on to explain that almost 70% of trade between Russia and China is in their national currencies.
When Russia launches a new payment system, and all the crypto exchanges go as planned, Russia’s economy is expected to get back on track. Apart from the improvement in cross-country trade and using crypto globally, Russia is also expecting to standardize the use of digital Rubles instead of Dollars for trade with other countries.