Russia’s CBDC initiative to target foreign access following proposed amendments

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Russian lawmakers are tweaking the legal framework for its central bank digital currency (CBDC) to allow foreign users increased access to the digital ruble.

The move comes after state-owned media Interfax reported that the State Duma Committee on the Financial Market made several amendments to the digital ruble bill. The changes affect several areas, including the central bank’s control, advertisement, and debt collection.

Under the bill’s first iteration, non-residents will only be allowed to access the CBDC via authorized banks. However, the Committee deemed the provision narrow, expanding access to foreign banks provided they are participants in the digital ruble platform.

Non-residents can now conduct transactions with the digital ruble without any restrictions, bringing them to par with Russian residents. Last year, it appeared that the central bank and the Finance Ministry were keen on limiting foreign usage of the digital ruble, a stance that has been shifting since the start of 2023.

“In the version of the first reading, the bill assumed that non-residents would be able to access the digital ruble platform through authorized banks,” read the report. “In addition, it was clarified that non-residents have the right to dispose of digital rubles within the digital ruble platform in accordance with its rules.”

Following stifling Western sanctions, Russia has increasingly eyed cross-border functionality for its CBDC to settle international transactions. Although there has been no official announcement, several reports suggest that the Russian central bank is mulling linkages with China, India, and Iran.

Russia’s parliament has also explored the use of precious metals and stablecoins as ways to settle international transactions in a valiant attempt to circumvent the economic sanctions.

The new proposals will be presented to the broader house for approval in the coming weeks, with the parliament hoping to launch the legal framework by the end of July.

A hitch in the grand scheme of things

The delays in floating a legal framework for the digital ruble forced the central bank to postpone its widely anticipated retail pilot from April 1 to a later date. Anatoly Aksakov, head of the Duma Committee on Financial Markets, stated that the new tentative date for the bill would be in July.

Russia’s banking regulator has since lined up 13 commercial banks to assist in its digital ruble pilot, focusing on the issuance and distribution amongst customers. If things go according to plan, the digital ruble could see a full-scale launch in 2024.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Blockchain provides perfect foundation for CBDC