While Russia gears up to legalize international crypto payments, industry experts do not believe that it will be able to evade sanctions this way.
Simultaneously, the United States has also been working on tightening the noose, as it has introduced new legislation in the Congress for targeting the use of crypto for dodging the Western sanctions.
The Russian authorities announced this week that they had begun the development of a mechanism for using crypto assets to make cross-border payments.
The purpose of doing so is to reduce the pressure of financial restrictions that Western nations have imposed on the country’s trade and economy.
The Ministry of Finance had announced that it had come to an agreement with the Central Bank of Russia (CBR) for issuing a bill to legalize such transactions.
Moscow has now accelerated its efforts for adopting regulations that would oversee the different activities associated with crypto assets, especially import and export payments that Western sanctions have restricted due to Ukraine’s invasion.
Meanwhile, a new bill was also approved by the US House of Congress that comprises of measures aimed at curbing the use of crypto for sanction evasion.
Industry experts and those with knowledge of the subject have shared their opinion of how realistic it is for Russia to evade sanctions with the use of crypto.
Exmo is a digital asset exchange and its director of development, Maria Stankevich, said that introducing a crypto payment system for circumventing sanctions was just a big illusion.
She said that this option had been discussed back in 2014 by a number of state-owned companies, as sanctions had then been imposed on Russia for its Crimea annexation.
Likewise, a senior lawyer, Mikhail Zhuzhzhalov agreed with the executive that it is not a new idea to use crypto for dealing with financial obstacles.
Russian authorities had considered giving permission to international companies in 2018 to use digital coins for making their settlements with their partners.
This was only applicable to companies in the special administered regions of Russia, but regulators had rejected this proposal, as they had a negative stance on crypto back then.
Zhuzhzhalov said that institutional players usually find themselves under regulatory pressure, such as peer-to-peer platforms, crypto exchanges, and those that issue tokenized and digital assets.
Even though crypto circulation in Russia is unregulated, going after companies that are legally operating with a license is very easy.
He noted that if these participants belong to other jurisdictions, they have to comply with the sanctions. If they are based in neutral countries, then they have to deal with secondary sanctions, as some Turkish banks did.
Out of five Turkish banks, two had decided to not use the Mir cards of Russia, which were widely being used by tourists.
This had come after Washington had indicated earlier this month that it would impose sanctions on countries that are conducting transactions with the Russian payment system.
Local media reports have revealed that a new Russian-Turkish payment system is under development.