Can encryption help Russia to overcome Western sanctions?

Russia has increasingly turned into encrypted currencies to face challenges with ruble transactions, including conversion issues, payment delays caused by Western sanctions and the fluctuation of exchange rates.

While Crypto may enable Russia to finance illegal activities or facilitate limited trade, its broader adoption in international trade is still not certain due to the frequency of Moscow partners and increased scrutiny from Western governments.

Where does Russia stand on digital currencies?

Since Russia has been widely invaded by Ukraine, the authorities have taken important steps to enhance and organize cryptocurrencies after years of to hesitate.

A new set of laws that entered into force in November 2024 suppresses the coded currency mining and allows encryption payments for international transactions, though this local Payments are not legal.

It requires great regulations Expatriate miners – Those who receive an encrypted currency as a reward for using their devices to support Blockchain networks – to register in the tax authorities.

Meanwhile, Russia began the first international cryptocurrency transaction in late 2024 under the secrecy system. Governor of the Central Bank Elvira Nebulinina He said The experimental program will last up to three years.

What is behind Russia’s step?

Russia’s first goal is to take advantage of low energy costs to expand the encryption mining industry.

By 2023, Russia was Become The second largest encryption currency in the world and can be soon Industry leadership Globally, according to Bitriver, the largest Bitcoin mining provider in the country.

The Russian government has also launched several encryption initiatives that include state -owned major companies.

For example, at Gazprom Neft Plans announced For use Glow Excess gas was burned during oil drilling – for coding mining, following the example of countries like Oman.

The best organization also aims to improve tax collection and energy management. Under the new laws, the government can Restore Mining in areas facing energy lack, which is already a measure outlet In several areas to prevent power outage.

More importantly, Russia seeks to use the cryptocurrency for international payments out of the reach of Western organizers.

“The important thing is not the amount that we will get in the budget from mining, but that the cryptocurrency that is obtained as a result of this mining has become the basis for mutual settlements … in the external circle of goods and services that we receive from our partner countries,” Russian Finance Minister Anton Selwanov has become He said When announcing the legislative changes related to digital currencies.

Current currencies may provide a greater ability to transfer at the international level, and in the case Stablecoins Associated with realistic currencies such as the US dollar, less volatile than Russian rubles or other currencies. It also works with a western supervision less than traditional financial transactions.

Reuters I mentioned This month, Russia has begun accepting cryptocurrencies across the intermediaries for oil sales to China and India.

According to what was reported, Russian oil companies are used by Bitcoin and Tether Stablecoin the US dollar (USDT) for these transactions. Unlike Bitcoin, Stablecoins can not be extracted like USDT but can be obtained using other encrypted currencies.

To improve the local blood circulation for encryption, in Russia Drafting rules Allowing “highly qualified” investors to exchange encrypted currencies in a experimental framework.

Can Western organizers close the coding gap?

Western governments have increased the scrutiny of the use of cryptocurrencies, especially as opponents Iran and north korea Their participation in the sector expanded.

The United States recently punishment GARANTEX Crypto exchange for alleged money, which leads to arrest From the Russian resident of Bisiokov, in India. The American authorities seized $ 27 million from the associated Stablecoins.

There are ways of illegal or gray activities in the crystallized currency world, where the evil players resort to an unknown or unknown exchange such as GARANTEX, trading platforms or peers to hide their identity.

“These restrictions make the prevention of encryption crimes difficult, so most of the investigations interact largely. However, Western governments, with the help of industry professionals, have become good with the tracking and seizure of illegal assets.”

He cited the case of GARANTEX as an example of a successful cooperation between the American authorities and the Blockchain Intelligence Elliptic.

Voloshin said that while the learning curve to quickly reveal criminal activity is not alongside governments, the exchange of encryption is increasingly carried out strict compliance measures as the industry becomes more prevalent.

Martin Chorzma, an older colleague at the Peterson International Economy Institute, noted that Blockchain monitoring tools allow the organizers to track transactions on the notebook of the General Professor of Main Curricula such as Bitcoin.

“The key will be to determine a portfolio used by Russia or its opposite tip, and after that it may be relatively easy to determine all other wallets that deal with it to get to know the network,” Chorzma told the Moscow Times.

However, he has warned that encryption mixers – services that block the history of transactions – may complicate their application.

Are Russia’s partners ready to trade encryption?

The main question is whether the main commercial partners in Russia will settle the commercial contracts in the encrypted currency.

Countries like India and China may be open to increase the encryption payments for Russian exports.

According to Reuters, Chinese companies can transfer Yuan to mediators, who then transfer money to encryption and send it to Russia.

However, persuading foreign companies to accept encryption of regular transactions and great treatment is a tougher sale. Many trade partners in Russia, including the regional ally Kyrgyzstan and the main commercial partner, impose strict limits to the use of encryption.

Chorzma said that China is in particular one of the least friendly states of encryption in the world, and it prohibits all stocks as well as mining.

He said, “China sees the risks that its citizens are able to circumvent foreign currency exchange controls and conduct unimaginable transactions if they have access to them.” “My feeling is that China has found other ways to a barter to maintain trade as Russia continues despite the sanctions.”

Meanwhile, the sanctions seem to cause more problems Russian importersWho have to use the intermediaries assigned to make payments abroad, compared to exporters.

There are no reliable statistics to estimate the amount of Russia’s trade with its foreign partners in encrypted currencies. Voloshin said that the ruling on reports appears to be a marginal phenomenon, albeit increasing.

Besides the oil trade, the cryptocurrency is also used to buy civil and military electronics for Russia. However, most of this trade still depends on traditional banking methods, as Volushene pointed out.

“The transactions between large state -owned companies, such as the Rosneft Rosneft that sell oil to the Chinese CNPC, will continue to include government banks of the buyer, the seller and the direct transfers between the upper color, the yuan and the rupee, which are supported by central banks, instead of using the Cryptocurrency currency as a way to exchange.”