Russia Finance Ministry: Local businesses to decide on digital asset use on international payments

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Russia is moving towards digital assets at a frantic pace, and the latest development from the sanction-hit nation is a draft bill to oversee the use of digital assets for settlements. Reports suggest that the Ministry of Finance will permit local businesses to determine the best ways to incorporate virtual currencies in their operations.

Ivan Chebeskov, head of the Finance Ministry’s Financial Policy Department, noted at a symposium that entrepreneurs are in the best place to figure out the proper applications of virtual assets in payments rather than strict regulatory control.

“When a large number of people deal with this issue, some correct solution is found over time, better than if we [the authorities] proposed some solution that would not work for many,” Chebeskov said. “It will be on the side of the businesses to decide on the spectrum of how it should function.”

Chebeskov noted at the symposium titled “Cryptocurrencies in foreign economic activity: mining, payments, fiat transfer” that the move to involve businesses in the decision process will still require a level of government intervention. He added that the role of administrators will be to promote the scheme instead of “building the architecture completely.”

From Chebeskov’s statement, analysts have posited that businesses will be responsible for choosing the type of virtual currencies, the terms of dealing with counterparties, and the countries participating in the scheme.

The decision to involve entrepreneurs in the process follows the orders of Prime Minister Mikhail Mishustin for the leading regulators to achieve a consensus on the use of digital assets for cross-border settlements. However, the move has raised eyebrows because Russia’s previous stance of flexing its regulatory muscle over the entire virtual currency industry.

Sanctions are making Russia reconsider

After Russia invaded Ukraine in February, the country was hit with a barrage of sanctions by the United States and other Western nations. The country’s banks were expelled from the SWIFT network, making international transactions almost impossible.

Russia has announced plans to leverage digital assets for international transactions to mitigate the harsh effects of the sanctions. On September 5, the Bank of Russia revoked its hard stance on virtual currencies and admitted that they offer a way around the sanctions for cross-border payments. This is despite the implementation of a ban for its local use.

The banking regulator stated that local digital asset service providers will be at the forefront of the country’s efforts, and they “are obliged to comply with Anti-Money Laundering and Know Your Customer requirements.”

Watch: The BSV Global Blockchain Convention panel, The Future of Financial Services on Blockchain: More Efficiency & Inclusion