Russia is advancing its crypto strategy to circumvent Western sanctions. Unable to access dollars or euros, the country may turn to stablecoins to make payments with “friendly countries,” according to Russian state news agency Tass.
“We are currently working with a number of countries to create bilateral platforms in order not to use dollars and euros,” Russian Deputy Finance Minister Alexey Moiseyev said. “Stablecoins can be pegged to some generally recognized instrument, for example, gold, the value of which is clear and observable for all participants.”
To his point, stablecoins are a type of cryptocurrency pegged to another asset, like dollars or gold. They are designed to be stable, unlike bitcoin (BTC), ether (ETH), or other digital assets that are notoriously volatile. The crypto market’s top stablecoins are issued by centralized companies, such Tether’s USDT and Circle’s USDC.
As use cases go, Russia has a “real” real world need. They can’t pay for their imports in dollars or euros. Rubles still work, but low liquidity, exchange rate risks, and general macroeconomic conditions are putting an enormous amount of pressure on Russian exporters. With the big reserve currencies off-limits, there is a need for an alternative. Stablecoins fill the bill nicely. (No pun intended.)
Russia has been talking about this for years, but now there seems to be more urgency and a greater political will. We may see something this fall.
The U.S. Treasury has already warned crypto trading exchanges that there will be consequences for helping Russian companies to circumvent sanctions. The largest platforms, such as Binance and Coinbase, have introduced restrictions for Russian traders.
Is crypto a good work-around for Russia? Will we see weaponized crypto or a global “centralization” of decentralized finance?
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