On July 30, Russia passed a law that will allow businesses to use cryptocurrencies in international trade as the Kremlin seeks ways to circumvent Western sanctions, Reuters reports UNN.
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Western nations have imposed several rounds of sanctions on Russia and individuals associated with President Vladimir Putin since the start of the full-scale invasion, hoping to deplete the resources and sources of profit that fueled the war.
In June, the United States and other countries unveiled a new wave of sanctions targeting Russian financial institutions, as well as entities and individuals in China and other countries that help Moscow circumvent existing restrictions.
Trade between Russia and China has grown by 121% since 2021, emphasizing China's role as Moscow's economic lifeline. To maintain trade relations, a functioning payment system is necessary, and Russia was cut off from the international SWIFT system in 2022.
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On July 29, Russian media reported that, under pressure from Western countries, Chinese banks were rejecting and returning about 80% of Russian payments made in Chinese yuan.
Russian companies and individuals who try to make payments end up losing money on commissions and conversion fees and are unable to complete the transaction.
Russian companies doing business in China increasingly have to rely on intermediary services to help facilitate the transfer of money and goods, which can add 3 to 10% of commission costs.
The new law will come into effect in September, Reuters reports, but will not affect the existing ban on the use of cryptocurrencies for transactions within Russia.
The Central Bank of Russia will create an “experimental” infrastructure for digital payments, although no details have been announced yet.
“We are making a historic decision in the financial sector,” said Anatoly Aksakov, a Russian MP and chairman of the parliament's financial committee.