The Bank of Russia has plans in place to test cross-border transactions using digital assets and central bank digital currencies, as revealed by a deputy governor. The senior official maintains that these alternative instruments could augment efficiency in overseas trade, while specifying that such settlements will remain prohibited within Russia.
Initiative for Testing Digital Assets in Overseas Payments Receives Support from Russian Government
The Russian Federation is set to explore the potential of digital asset payments in settlements with global trade partners, as per the Deputy Chairman of the Central Bank of Russia (CBR), Alexey Guznov. He shared these plans with the daily Izvestia, with the business news portal RBC also quoting his statement. The official confirmed that this initiative has the backing of the executive power in Moscow.
Guznov further elaborated on the possibility of digital financial assets (DFAs) boosting the efficiency of foreign trade. However, he clarified that such transactions will remain off-limits within the country, aligning with Russia’s monetary authority’s steadfast stance.
The trial process will proceed in two phases, as outlined by the executive. In the first phase, Russian authorities will enact legislation providing a legal foundation for the so-called experimental legal regimes, which could also accommodate cryptocurrencies. The bank and finance ministry are jointly drafting the requisite bill to amend 30 legal acts.
As per the 2021 law “On Digital Financial Assets,” DFAs are typically tokenized versions of traditional assets issued on private blockchains developed and managed by entities authorized by the CBR. Atomyze’s tokenization service and the fintech company Lighthouse are amongst these.
Major Russian banks such as the private Alfa-Bank and the largely state-owned Sberbank are also part of this list. The latter has recently disclosed its plans to facilitate trading of digital assets on its blockchain platform for retail investors, possibly as soon as this month.
International Companies to be Given Access to Russian Digital Asset Market
The second phase of the experiment will test international transactions with digital assets. Both central bank digital currencies (CBDCs) like the digital ruble, and tokens issued collaboratively by Russian and overseas partners, will be utilized in the pilot, as detailed by the head of the parliamentary Financial Market Committee, Anatoly Aksakov.
Aksakov stressed the need for foreign entities to have access to Russia-based information systems. He had suggested in May that amendments will be made to the law on digital financial assets to facilitate their entry into the Russian market. Aksakov also observed that DFA payments could aid international settlements in the face of sanctions.
Russian officials have been contemplating the legalization of cross-border payments with digital assets, including cryptocurrencies, for over a year, against the backdrop of financial sanctions imposed on Russia due to its invasion of Ukraine. A number of bills are currently under parliament’s review. Aksakov also pointed out last month that larger Russian firms have already started utilizing crypto in overseas trade settlements.
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Frequently Asked Questions (FAQs) about Digital Asset Settlements in Russia
What is the objective of Russia’s plan to trial digital asset settlements in foreign trade?
The objective is to test cross-border transactions using digital assets and central bank digital currencies, aiming to improve the efficiency of overseas trade.
Will digital asset settlements be permitted within Russia?
No, despite the plans for testing digital asset settlements in foreign trade, such transactions will remain prohibited within Russia.
What are the two stages of the trials planned by the Bank of Russia?
The first stage involves Russian authorities enacting legislation that provides a legal foundation for experimental legal regimes, which could accommodate cryptocurrencies. The second stage will test international transactions with digital assets using both central bank digital currencies (like the digital ruble) and tokens issued by Russian and foreign partners.
Which Russian banks are involved in this digital asset initiative?
Major Russian banks such as the private Alfa-Bank and the largely state-owned Sberbank are involved in this initiative.
Will foreign firms have access to the Russian digital asset market?
Yes, foreign entities will be granted access to the Russian digital asset market, and they will be allowed to use Russia-based information systems as part of the initiative.
More about Digital Asset Settlements in Russia
- Bank of Russia
- Russia’s Law on Digital Financial Assets
- Central Bank Digital Currencies