Russia on July 30 passed a law that will allow businesses to use cryptocurrencies in international trade, as the Kremlin seeks ways to circumvent Western sanctions, Reuters reported on July 30.
Western countries have launched several rounds of sanctions against Russia and individuals associated with President Vladimir Putin since the beginning of the full-scale invasion in hopes of depleting the resources and sources of revenue fuelling the war.
In June, the U.S. and other countries unveiled a new wave of sanctions that targeted Russian financial institutions, as well as entities and individuals based in China and elsewhere that help Moscow circumvent the existing restrictions.
Trade between Russia and China has surged by 121% since 2021, underscoring the Chinese role as Moscow's economic lifeline. A functioning payment system is necessary for maintaining trade relations, and Russia was cut off from the international SWIFT system in 2022.
On July 29, the Russian state-controlled media outlet Kommersant reported that Chinese banks are rejecting and returning about 80% of Russian payments made in Chinese yuan, under pressure from Western nations.
Russian businesses and individuals attempting to make the payments then lose money on commission and conversion fees and are unable to complete the transaction.
Russian companies doing business in China have increasingly had to rely on intermediary services that help facilitate the transfer of money and goods, which can add anywhere from 3-10% of commission-related expenses.
The new law will go into force in September, Reuters reports, but will not affect an existing ban on cryptocurrencies being used for transactions inside Russia.
Russia's Central Bank will create an "experimental" infrastructure for the digital payments though no details have yet been released.
"We are taking a historic decision in the financial sphere," said Russian lawmaker Anatoly Aksakov, head of the parliament's finance committee.
The Kyiv Independent news desk
