Russia Announces Plans to Use CBDC for International Trade With China
- Russia has grown heavily reliant on its ties with China as Western sanctions cripple its economy.
- According to Chainalysis, Russia has received more than $2 million in crypto donations since its war with Ukraine began.
- World leaders are concerned that Russia could leverage cryptocurrencies to evade sanctions.
A Russian senior official has disclosed the country’s plans to conduct international trade with China using its CBDC. The Eastern European nation is reportedly in the pilot phase of its CBDC (Central Bank Digital Currency.)
The Russian official confirmed that the Vladimir Putin-led administration will use the digital rouble for international trade in 2023. Russian authorities are currently testing the digital rouble with banks for settlement and believe it will be ready for full deployment in early 2023.
Heavy sanctions from the West largely influenced the country’s decision to turn to digital currencies. The United States and its allies imposed economic sanctions on Russia for its invasion of Ukraine earlier this year.
In addition, the US Treasury Department recently added 22 people and two organizations with addresses in Russia to the sanctions list. In response to the intensifying Western sanctions, Russia has been actively seeking out alternative banking and trade deals.
The head of Russia’s lower house of parliament’s finance committee, Anatoly Aksakov, recently acknowledged that the geopolitical crises had impeded Russia’s access to the global market. According to Anatoly, a national digital currency appears to be Russia’s best alternative at the moment. He said,
The topic of digital financial assets, the digital rouble and cryptocurrencies are currently intensifying in society, as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements.
Moscow has come to depend heavily on its alliance with Beijing as it continues to face global isolation. Anatoly further remarked that the success of the digital rouble would inspire other nations to follow suit and reduce their dependence on the US dollar.
“If we launch this, then other countries will begin to actively use it going forward, and America’s control over the global financial system will effectively end,” Anatoly added.
While Russia has found a reliable partner in China, the West has grown increasingly concerned about this relationship. For some time, China has been viewed as a world superpower, with sufficient economic backing to champion its cause.
Why Has Russia Turned to Crypto?
Earlier this month, Russian officials revealed that the country had begun talks with a number of “friendly” nations about establishing clearing platforms for international settlements in stablecoins. President Putin’s government is actively working on ways to create a bilateral platform to avoid using dollars and euros.
The news showed Russia’s stance on cryptocurrency and digital has softened since the war began. In July, President Putin signed a law that prohibits digital payments. Additionally, the Bank of Russia called for a ban on all cryptocurrency activities in the country.
But new laws currently in deliberation show that Russia has become open to the idea of a crypto-backed economy. The Finance Ministry and the Bank of Russia notably stated that the country’s present situation makes it impossible to do without cross-border settlements in cryptocurrencies.
Since February of this year, Russia has received several aids in cryptocurrencies. According to a report from Chainalysis, multiple pro-Russian organizations have received more than $2 million in cryptocurrency donations (mostly in the form of BTC and ETH) to support Russia’s war with Ukraine.
Chainalysis identified a total of 54 pro-Russian groups that have received more than $2.2 million in BTC, ETH, Tether, LTC, and DOGE to support paramilitary groups in the Donbas region of Ukraine with equipment and logistics.
Chainalysis claims that the pro-Russian organizations are buying weapons, drones, protective jackets, communication equipment, and other military items with their cryptocurrency donations.
While Russia’s crypto donations pale in comparison to Ukraine’s, global leaders believe such donations empower Russia in its attack against a sovereign state.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
