Russia’s central bank indicated on September 5 that the country may reconsider utilizing cryptocurrency for foreign payments.
According to the report, Russia’s Deputy Finance Minister Alexei Moiseev stated that the central bank and the finance ministry may soon authorize cryptocurrency payments.
Moiseev went on to say that Russians’ reliance on foreign platforms for crypto transactions underscores the importance of localizing the industry.
“Now people open crypto wallets outside the Russian Federation. It is necessary that this can be done in Russia, that this is done by entities supervised by the Central Bank, which are required to comply with the requirements of anti-money laundering legislation, and first of all, of course, to know their client.”
Western countries have escalated their scrutiny and sanctions against Russia as a result of its invasion of Ukraine.
The penalties sparked speculation that Russia could use cryptocurrency to avoid the sanctions, but stakeholders in the crypto industry have stressed that this is not possible.
Russia’s stance on cryptocurrency is unclear, as President Vladimir Putin recently signed legislation prohibiting the use of local cryptocurrencies for payment in the country.
Meanwhile, Russia is hardly the only government contemplating the use of cryptocurrency to circumvent sanctions. Iran has completed its first overseas trade order, importing products worth $10 million in cryptocurrencies.
The United Kingdom has ordered cryptocurrency exchanges to record transactions involving Russia.
UK officials have drafted new rules requiring cryptocurrency exchanges to notify transactions involving sanctioned entities such as Russia.
According to the new official guidance, crypto exchanges should also freeze crypto assets from sanctioned firms.
The guideline defined “crypto assets” as digital currencies such as Bitcoin (BTC), Ethereum (ETH), and others, as well as non-fungible tokens.
The measure followed worries that Russia may be utilizing cryptocurrency to circumvent sanctions.
According to a Treasury spokesperson:
“It is vital to address the risk of cryptoassets being used to breach or circumvent financial sanctions. These new requirements will cover firms that either record holdings of, or enable the transfer of cryptoassets and are therefore most likely to hold relevant information.”