Over the last two years, crypto news has gone from a tech niche shared among fanatics to blockbuster stories with hefty political implications behind them. It’s an industry now legitimized by hundreds of billions of dollars in investment, government bans, infrastructure laws and even a role in international conflict. This global role continues to increase in magnitude this week as several states look to crypto to help them reenter the global market.
The Russian crypto saga is perhaps one of the most interesting. Its relationship with digital assets is quite similar to that of China. Both were, at one point or another, powerhouses for crypto mining. They both outright banned cryptocurrency transactions within their borders. They both softened their stances toward cross-border payments after these bans. And now, Russia joins China again as it entertains the possibility of a Central Bank Digital Currency (CBDC).
A number of Russian government agencies have gone from bearish to bullish on different aspects of the crypto universe. Most notable is a growing affinity among these bodies for leveraging crypto for cross-border payments, and a CBDC stands to do that. Not to mention, by banning all other cryptos but allowing for a Russian CBDC, the Russian Central Bank can closely control the currency.
According to new reports, Russia is already well on its way with this project. It is already in the midst of its CBDC pilot program, testing the uses, benefits and pitfalls of implementing a digital ruble. The country says it plans to complete the groundwork for the CBDC by early 2023. By 2024, it hopes to connect all banks and finance institutions to the digital ruble.
Crypto News: CBDC News Shows Russia Following Iran’s Footsteps
The crypto news coming out of the Russian Federation might not come as a surprise given some other clues investors have gotten over the last year. The country has been in lockstep with Iran, a close economic and military ally. These similarities speak to Russia’s ultimate goal of using crypto to avoid sanctions.
Only about a week ago did Russian officials announce plans to amend existing crypto laws to allow cross-border payments. The adjusted plans came just one month after an Iranian bill was signed into law, similarly enabling cross-border crypto payments for businesses. Moreover, Iran has been vocal about its own plans for a CBDC for many months now, and kicked off its own CBDC trial this week as well.
This side-by-side development is not surprising at all. Earlier this year, Russia joined Iran as one of the most sanctioned countries in the world after it began its invasion of Ukraine. When these sanctions first landed in early spring, analysts were certain that Russia could not move into crypto to avoid them. However, Iran has proved these claims false, as it has gone on to subvert its own sanctions with this new crypto law. Using crypto, the country has been able to import $10 million worth of vehicles, the first such import for the country in decades.
The news has the U.S. Department of the Treasury on notice, as it has gone back to a stance that Russia can indeed use crypto to evade sanctions.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
