Russia allows cryptocurrency to evade international sanctions

The Bank of Russia will allow cryptocurrency for international settlements as a countermeasure against sanctions. It won't affect the current legal status of crypto trading, which remains illegal in Russia.

Russia cryptocurrency

Since the beginning of Russian aggression against Ukraine, the US Department of the Treasury has imposed sanctions on around 2,400 Russian individuals and legal entities, while the US Department of Commerce has introduced prohibitive controls on exports to Russia. Also, the EU has launched massive sanctions against the aggressor, freezing €21.5 billion of assets in the EU, blocking €300 billion of assets from the Central Bank of Russia in the EU and G7 countries, and seriously hurting Russian exports and imports.

Russia resorts to various tricks and countermeasures to evade sanctions, like intermediary trading, ship-to-ship transfers in international waters, or paying in rubles. Now, the country has turned to crypto as a way to circumvent financial restrictions imposed by the West. According to the report from the state-owned TASS news agency, the Central Bank of the Russian Federation (CBR), aka Bank of Russia, will allow cryptocurrency use for foreign settlements.

Read also: Russian arrested for sending crypto to Ukraine's army

"Adhering to the policy that cryptocurrency should not be used within the country, we propose to allow it as an experimental measure. The relevant bill is also being prepared to introduce an experimental legal regime," Elvira Nabiullina, CBR's head, said at the meeting with members of the New People party in the State Duma. The plan involves establishing dedicated entities to supervise crypto mining and financial settlements with foreign organizations. The mechanism will support global cryptocurrencies and "regular digital financial assets" allowed for trading in the Russian market.

In a statement for the press, CBR's deputy chairman Aleksey Guznov clarified that the government is currently examining organizations fit to participate in the project. Earlier, the deputy finance minister mentioned that, considering current legal circumstances, the scheme proposed by the Bank of Russia is feasible only by means of transnational settlements.

Read also: Russia will use digital rouble for settlements with China

CBR hasn't moved an inch from its position on the legality of crypto in Russia. In January 2022, the Bank proposed to ban "all cryptocurrency issuance and operations, stop banks from investing in cryptocurrencies, block exchanging crypto for traditional currency, and introduce legal liability for using crypto in purchases," citing systemic financial risk. Six months later Vladimir Putin signed a bill "prohibiting the use of digital assets, such as cryptocurrency and NFTs, to pay for goods and services." Crypto platforms, exchanges, and settlements are also illegal in Russia.