A new law in Russia allows for cross-border payments using cryptocurrency, which could help the country avoid international sanctions ¹. However, experts are skeptical about the effectiveness of this approach due to the traceability of blockchain transactions and the risk of even tougher sanctions ¹.
The law, signed by President Vladimir Putin in late July, permits cross-border crypto payments but doesn't lift the existing ban on using cryptocurrencies for regular payments within Russia ¹. The central bank will oversee an "experimental" regime, and details on how this will work are still unclear ¹.
Russia has been hit with 16500 sanctions since its invasion of Ukraine in February 2022, and about half of its foreign currency reserves are frozen ¹. The country is looking for ways to circumvent Western sanctions, but analysts doubt that crypto will be an effective solution ¹.
Some experts believe that Russia's central bank will struggle to implement the law effectively, and that foreign partners may be hesitant to engage in crypto transactions with Russia due to the risk of secondary sanctions ¹. Others note that the law's "experimental" nature allows for flexibility, but also creates uncertainty and potential risks ¹.