Owing to economic challenges and sanctions, Russia is considering using stablecoins to conduct cross-border transactions, especially with China. The Russian central bank, which was not very receptive to digital currencies earlier, has now realized the potential of these crypto-assets in international financial operations facilitated by blockchain. Such a policy change could lead to the adoption of a lawful stablecoin system, creating more trade possibilities even with sanctions.
Russia Eyes Stablecoins for International Payments
According to Alexei Guznov, the deputy governor of the Bank of Russia, the current negotiations are to develop stablecoin regulatory measures. This proposal aims to provide a legal pathway for the transfer, accumulation, and use of stablecoins in international payments. Thus, Guznov notes that this initiative may move from the experimental stage to a stable regulatory framework. Still, the timeline for the execution of the project still needs to be set as the central bank ensures that any complications that may arise from international finance laws and sanctions are avoided.
Advertisement
The regulation can profoundly affect the Russian business environment that deals with international trade, particularly with Asian countries. Thus, using stablecoins, which are oriented toward reserve assets and have a central issuer, Russia can avoid some of the barriers existing in the current financial systems that are restricted due to sanctions.
Global Banks Embrace Digital Currency Innovations
This is as other nations look to embrace digital currencies in the banking sector as the world moves towards using the same. For example, Singapore’s biggest bank, DBS Group Holdings, has entered the cryptocurrency market through a partnership with Paxos Trust Co, where they offer custody for stablecoins and the management of the related cash balances.
Advertisement
However, the use of stablecoins in international trade creates many compliance issues, especially the issue of compliance with sanctions. Tether, a company issuing stablecoins, has also joined the compliance of global sanctions policies by signing an agreement with Chainalysis. This collaboration focuses on identifying and preventing the transactions associated with the risky or sanctioned entities.
