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The Bank of Russia is considering approving stablecoins for cross-border trades, as local businesses explore alternative methods to conduct trade with China amid sanctions.
Stablecoins for Cross-Border Transactions
Russia’s central bank, the Bank of Russia, is exploring the legalization of stablecoins for cross-border transactions. The sanction-affected economy is seeking alternative ways to maintain trading activity with China.
In an interview with Russia’s state newspaper Izvestia, central bank deputy governor Alexei Guznov mentioned that the proposal is under discussion. The goal is to regulate the entire process chain that would enable individuals to transfer these assets into Russia, accumulate them, and use them for international payments.
Guznov indicated that what starts as a temporary experiment could potentially become a permanent regulatory framework. However, specifics regarding the timeline for approval weren’t disclosed.
Stablecoins vs Traditional Cryptocurrencies
Stablecoins, unlike traditional cryptocurrencies like Bitcoin (BTC), are typically backed by assets and have a central issuer. This addresses concerns that previously led the Bank of Russia to oppose legalizing digital assets. Recent shifts suggest the central bank is adjusting its stance, as even major Russian metal producers have started using stablecoins for transactions with China due to severe limitations on traditional payment methods caused by sanctions.
Compliance and Legalization Challenges
Despite these developments, questions remain about how the legalization of stablecoins would navigate international sanctions compliance. Tether, for instance, has expressed willingness to adhere to sanctions policies. Recently, Tether collaborated with Chainalysis to identify wallets that “may pose risks or may be associated with illicit and/or sanctioned addresses.”
“The eventual goal is to regulate the entire process chain that would enable individuals to transfer these assets into Russia, accumulate them, and use them for international payments.”
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