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The Russian government has set up a special working group to work on pilot regulation of foreign trade settlements using cryptocurrencies. Vedomosti reported on September 17 that this measure is aimed mainly at issues related to dual-use goods, which are products with both civil and military applications.
The newly formed group comprises selected importers and banks that exist under legal regulations that Russia put in place for such experimentation.
The focus group is established under the Electoral Legal Provisions (ELP), a provision that permits the country to pilot allied innovative financial practices without extensive legal endorsement.
This group of members comprises those companies with a very high business turnover who include members of the Russian Chamber of Commerce and Industry (CCI) and the Association of Developers and Producers of Electronics (ARPE) and some of the leading banks. The qualification criteria highlight that the focus of the initiative is on organizations that handle large volumes of sensitive cross-border transactions.
While the complete list of financial institutions to participate in the program still remains undisclosed, the members of the focus group overwhelmingly comprise the entities that contribute to bringing in dual-use goods. These goods often have very strict international sanctions and restrictions, and therefore traditional banking services are ineffective or nonexistent.
Tether (USDT) and other cryptocurrencies have been adopted in these businesses as a means to eliminate most of the restrictions that come as a result of global sanctions and traditional banking systems.
The transition to cryptocurrencies is due to various international processes that forced Russia to reconsider its approaches to transactions. After China’s actions of banning the sale of civilian drones that it considered a threat to its security and which are now used for military purposes, Russia has had no option than to change its methods of trading to enable it to continue importing drones.
This necessity became even more acute after the Russian invasion of Ukraine and further restrictions on SWIFT, or after the de facto cessation of yuan transactions due to the risk of secondary sanctions from Chinese banks.
The challenges mentioned are a direct cause of the focus group’s experimentation with cryptocurrencies. Research shows that the largest Russian unregulated metal players have commenced the adoption of Tether in cross-border deals with partners in China to avoid those measures tied to the US dollar and yuan. Besides giving another avenue through which international payments could be made, the method also denotes a shift which seeks to isolate Russia’s trade activities from unrest.
