Russian U-turn Could Legalise Crypto To Create Cross-Border Payments Lifeline

September 7, 2022
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A top official at Russia’s Ministry of Finance has said the country may legalise crypto to create a cross-border payments lifeline, marking a dramatic U-turn from a new law passed only two months ago.

A top official at Russia’s Ministry of Finance has said the country may legalise crypto to create a cross-border payments lifeline, marking a dramatic U-turn from a new law passed only two months ago.

Speaking to the Russia-24 news channel, and quoted by Russian news agency TASS, Alexey Moyseev, deputy finance minister, said his agency and the Central Bank of Russia (CBR) are moving towards an agreement on the issue.

In a remarkable admission, Moyseev said that under the current sanctions regime, both agencies agree that it is “impossible” to go without cryptocurrency for cross-border payments.

"As for the regulation of the cryptocurrency market, a difference in approaches remains,” he said.

“But I can say that the central bank has had a rethink, taking into account the fact that the situation has changed, and we are doing the same.”

In July this year, as reported by VIXIO, the Russian Duma passed a new law that would prohibit the acceptance of digital assets as a means of payment.

Moyseev went on to say that such a system would be “too rigid” to permit the use of cryptocurrency for cross-border payments, but this could change.

“First of all, we must legalise cryptocurrency somehow,” he said. “On the one hand, we must give people the opportunity to use it, while on the other hand, put it under control so that there is no money laundering, no paying for drugs and so on."

Moyseev proposed that crypto-assets become fully regulated within Russia and that Russian firms be allowed to offer them.

“At the moment, people open crypto wallets outside the Russian Federation,” he said.

“It is necessary that this can be done in Russia, and 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, they must know their customers.”

Counter-sanctions for ‘unfriendly countries’

In related news, Russia is seeking to further restrict its citizens from being able to access securities issued by foreign entities in “unfriendly countries”.

This week, the CBR announced that from October onwards, non-qualified investors may hold no more than 15 percent of their portfolio in such securities.

In order to carry out the order, the central bank has issued a circular to Russian brokers that would normally facilitate such transactions.

“This decision is aimed at minimising the infrastructure risks faced by non-qualified investors, since foreign financial institutions maintaining the record of such securities may block the opportunity to dispose of purchased assets without any warning,” said the CBR.

According to the CBR, more than 5m Russian investors have already been cut off from the assets they invested in.

“It is very difficult to protect the rights of holders of these securities after the fact, as the solution of the problem is beyond the scope of Russian jurisdiction,” the CBR added.

The circular also covers orders to buy and sell deliverable derivatives if the underlying asset is from a foreign securities issuer in an unfriendly country, as well as orders to increase short positions in such securities.

However, the restrictions do not apply to the closure of short positions.

The CBR added that, in future, it will consult with friendly countries to set up a “custody system” that can bypass the depositories of unfriendly countries.

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