- Russia plans to create two crypto exchanges and stablecoins for its foreign trades
- However, the plan could face potential challenges, according to experts
As an analyst with over two decades of experience observing and analyzing global financial markets, I find Russia’s bold foray into cryptocurrencies and stablecoins for foreign trade both intriguing and challenging. It is not uncommon to see nations leveraging technological advancements to reshape their economies, but the current geopolitical context adds a layer of complexity that sets this initiative apart.
Russia intends to launch two cryptocurrency exchanges and develop stablecoins connected to the Chinese Yuan and the currencies of BRICS nations, as a means to enhance its international trade, according to a report by Russian publication Kommersant.
“The main focus right now is on developing stable coins, with plans to create some that are linked to the Chinese Yuan and a collection of BRICS countries’ currencies.”
Russian plan – Foreign trade using crypto
Previously, Russia’s cryptocurrency actions, particularly those affecting foreign commerce, have made news on several occasions. Just last month, they enacted a significant crypto law (Experimental Legal Regime—ELR), which includes regulations for crypto mining and marks a progression towards incorporating cryptocurrencies into their international trade dealings.
The purpose of this plan is to protect the nation from potential economic hardships and delays caused by Western sanctions. As early as July, Governor Elvira Nabiullina of Russia’s Central Bank openly discussed the strain these sanctions were causing.
“The potential for additional penalties is increasing, and it’s becoming more challenging to process payments for imports, especially a broad variety of products, which is cause for concern.”
Russia’s bold crypto experiment
The latest update seeks to accelerate the use of crypto to alleviate these problems. To achieve this, Russia will establish two crypto exchanges, one with the St. Petersburg Currency Exchange and another in Moscow.
As per a regulatory expert who is knowledgeable about the plans, Mikhail Uspenksy has revealed that the exchange’s first stage will involve a limited number of enterprises and individuals.
At first, this platform will operate in a trial phase for a select number of users. After that, it’s intended for large corporations, including their subsidiaries, affiliates, and associated businesses.
However, the report also noted potential challenges to adopting the planned exchanges and stablecoins. According to Nikita Vassev, Founder of TerraCrypto, only people without choice will use the platforms.
“When all other options are exhausted, an individual may resort to using these platforms. A market participant would opt for a local platform only when they find themselves with no alternative but to do so, in other words, out of desperation.”
Additionally, Uspensky pointed out that digital assets associated with a Russian trading platform could trigger alerts abroad. Such flagging could potentially put the users, whether they’re sending or receiving, in a vulnerable position.
“Should any news emerge about cryptocurrency purchases made on a Russian platform becoming public knowledge, it’s simple to trace such transactions using specialized technology. This labeling as suspicious could negatively impact not only the parties involved in these deals but also future owners of the digital currency, regardless of their connection to Russia.”
The focus will now shift to the state and its mitigation strategy to address some of the potential challenges to its crypto plan.
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2024-08-24 09:44