Russian businesses turn to cryptocurrencies for international trade

Russian businesses are increasingly turning to cryptocurrencies such as bitcoin for international transactions, a development driven by recent legislative changes aimed at circumventing Western sanctions. This shift has gained traction following sanctions imposed on Russia in response to its invasion of Ukraine in 2022, which have significantly hindered the country’s ability to engage in trade with key partners, including China and Turkey.

According to a report from Reuters on December 26, Russian Finance Minister Anton Siluanov confirmed this emerging trend during an interview with the Russia 24 television channel. He stated, “As part of the experimental regime, it is possible to use bitcoins, which we had mined here in Russia (in foreign trade transactions). Such transactions are already occurring. We believe they should be expanded and developed further. I am confident this will happen next year.” Siluanov emphasized that the use of digital currencies for international payments signifies a forward-looking approach for Russian commerce.

The shift towards blockchain technology in payment systems has also been observed globally. A recent report from PYMNTS highlighted that cross-border payment methods traditionally characterised by high fees and slow processing have seen significant improvements in 2024 due to the introduction of blockchain technology. This technology is offering enhanced transparency, speed, and cost efficiency in transactions.

Stablecoins, which are pegged to traditional currencies, have emerged as a pivotal element in facilitating these transactions. The PYMNTS report indicates that they enable businesses to bypass conventional correspondent banking networks, allowing for almost instant settlement of transactions. Raj Dhamodharan, the executive vice president of blockchain and digital assets at Mastercard, noted, “Blockchain technology and public blockchains in particular, are opening up a number of new use cases, one of which is to transfer value — such as remittances — from one country to another.”

Research from PYMNTS Intelligence suggests that the application of cryptocurrency in cross-border payments could emerge as the breakthrough use case the digital currency sector has been searching for. The findings indicate that firms are increasingly adopting blockchain-based solutions, particularly stablecoins, to enhance their international transactions.

Sheraz Shere, the general manager of payments and commerce at the Solana Foundation, commented on the trend, stating, “Blockchain solutions and stablecoins — I don’t like to use the term crypto because this is more about FinTech — they’ve found product-market fit in cross-border payments. You get the disintermediation, you get the speed, you get the transparency, you get extremely low cost.”

The combination of Russia’s pivot towards cryptocurrencies for international trade and the global adoption of blockchain technology highlights a significant transformation in the ways businesses conduct transactions across borders. These developments underscore a broader trend that reshapes the future of commerce in an increasingly interconnected world.

Source: Noah Wire Services