Reforms under the pressure of Russian sanctions: from exchanges to BRICS stablecoins

Source: Aiying Payment Compliance

Russia has long been conservative about cryptocurrencies. The Russian government and central bank are generally concerned about the potential threat of cryptocurrencies to financial stability and their use in illegal activities, so they have taken strict regulatory measures. Prior to this, Russia had tried many times to restrict the use of cryptocurrencies in the country and introduced laws prohibiting the circulation of private cryptocurrencies in the country.

However, with the intensification of international sanctions, especially after Russia suffered extensive economic sanctions from Western countries due to the conflict in Ukraine, Russia has been forced to reassess its position on cryptocurrencies. These sanctions have had a serious impact on Russia's economy, especially its international trade, and have posed huge challenges to Russia in the global financial system. Traditional financial payment channels (such as SWIFT) are restricted, and Russian companies have encountered many difficulties in making international payments.

Against this background, the Russian government began to consider cryptocurrency as an alternative international payment tool to bypass sanctions and maintain the continuity of economic activities. On July 30, 2024, the Russian State Duma passed a key bill allowing the use of cryptocurrencies in cross-border payments. This marks a major shift in Russia's attitude towards cryptocurrencies. Through this bill, Russia not only hopes to solve the current payment dilemma, but also hopes to use it to promote its innovation and development in the digital economy.

In addition, Russia also plans to find a balance in the parallel development of digital ruble and cryptocurrency. Although the digital ruble is still an officially recognized digital currency, it does not exclude the use of cryptocurrency for cross-border payments as a national policy.

Russia promotes the strategic deployment of two major cryptocurrency exchanges

On August 23, according to the Russian newspaper Kommersant, the Russian government is actively promoting the establishment of two major cryptocurrency exchanges in Moscow and St. Petersburg. This move is not only to cope with the financial challenges brought about by international sanctions, but also to occupy a place in the global digital economy.

According to Aiying Aiying's understanding of the Moscow Exchange's planMoscow's cryptocurrency exchange may use the existing Moscow Exchange (MOEX) infrastructure for expansion and development. As Russia's major financial center, the Moscow Exchange has rich technical and management experience and can effectively support the trading and clearing systems of cryptocurrencies. The main goal of the new exchange is to promote the use of cryptocurrencies in international trade, especially in the context of current sanctions, and to provide a viable cross-border payment solution. By leveraging the existing resources and network of the Moscow Exchange, the cryptocurrency exchange will be able to quickly establish a solid market position and provide a reliable trading platform for Russia's international trading partners.

Planning for the St. Petersburg ExchangeIn contrast, the St. Petersburg cryptocurrency exchange is planned to rely on the infrastructure of the St. Petersburg Currency Exchange (SPCE). St. Petersburg, as another important financial center in Russia, is of strategic importance, especially in the field of foreign trade. SPCE has accumulated rich experience in handling commodity trading and foreign exchange transactions, which makes it an ideal platform to support cryptocurrency transactions. The main function of the exchange will be to provide new financial instruments for Russia's foreign trade activities, helping companies to bypass the payment barriers caused by sanctions and continue to trade effectively with the international market. By leveraging the mature platform of SPCE, the St. Petersburg cryptocurrency exchange will be able to provide more flexible and diversified payment options for Russian foreign trade companies.

At present, in the settlement link, there is a big obstacle in how trading companies can reasonably and legally purchase stablecoins, and the timely emergence of exchanges may be the result of complying with the development needs of market demand.

BRICS stablecoins pegged to RMB: strategic planning and implementation

The two cryptocurrency exchanges that Russia plans to launch are not only to respond to current international economic sanctions, but also to shoulder the important mission of promoting economic cooperation among BRICS countries. According to Aiying, a core goal of the two exchanges is to promote the creation and use of BRICS stablecoins pegged to RMB. The launch of BRICS stablecoins is seen as a key measure to strengthen economic ties and reduce dependence on the US dollar among BRICS countries (including Brazil, Russia, India, China and South Africa).

The role of stablecoinsBRICS stablecoins will be a digital currency pegged to RMB, designed to be a tool for trade settlement between BRICS countries. This stablecoin is designed to respond to the economic imbalances and sanctions risks brought about by the dominance of the US dollar in the current global financial system. Through stablecoins, BRICS countries can bypass the US dollar and make cross-border payments directly, thereby reducing transaction costs and the uncertainty caused by exchange rate fluctuations.

The use of stablecoins will also promote economic integration among BRICS countries. By providing a unified and stable settlement tool, BRICS stablecoins can accelerate economic flows within the region and promote trade and investment among member countries. The transparency and decentralization of this digital currency can reduce dependence on the traditional financial system while improving transaction efficiency, thereby enhancing the financial autonomy of BRICS countries.

Russia's strategic considerationsFor Russia, promoting the use of BRICS stablecoins will not only help it cope with Western sanctions, but also be an important means for it to reposition itself in the global economy. Russia hopes to further strengthen its economic ties with BRICS countries such as China and promote the development of the multilateral trading system through this stablecoin. In addition, the use of BRICS stablecoins will provide Russia with a new economic growth point and help it occupy a more advantageous position in the digital economy.

Against the current background of international sanctions, Russia's promotion of cryptocurrency policies is of great significance.