2024-07-20
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Bank of Russia to set up entities for crypto mining and cross-border settlement: Report

Russia’s central bank plans to create new institutions to mine crypto assets and settle international payments.

Russia is taking further steps to mitigate global sanctions in place since the invasion of Ukraine in 2022. According to local media reports, the country’s central bank plans to create new institutions to mine crypto assets and settle international payments. 

In a meeting in the State Duma — one of the chambers of the Russian parliament — the head of the central bank, Elvira Nabiullina, announced that the Bank of Russia would allow cryptocurrency to be used in external settlements in a pilot program. The move, however, does not signal a change in the country’s crypto environment:

“We adhere to the same position that within the country, cryptocurrency […] should not be used, and for external settlements, we assume that this is possible in the form of an experiment. This bill is also being prepared in the form of an experimental legal regime,” Nabiullina said, according to a translated summary of the report.

The plan includes the creation of “special authorized organizations” for crypto mining and international settlements — including transactions involving cryptocurrencies and other digital assets, stated Nabiullina, a former economic adviser to Russian President Vladimir Putin.

Bank of Russia deputy chairman Aleksey Guznov told journalists that the bank is negotiating with the government on how the companies will operate. “Currently, a discussion is underway with the government so that their scope of activity is clear,” Guznov said, adding that private companies may be able to contribute to those initiatives in the future.

In a statement to Cointelegraph, Gabby Kusz, CEO of the Global Digital Asset & Cryptocurrency Association, said that Russia, China and other countries are realizing “Crypto is not a new financial product, but an evolution or fundamental change in the way individuals and organizations exchange value.”

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She also highlighted that this movement would potentially impact the global financial system, including the United States’ relevance to the future of finance in the digital era:

“Overly aggressive actions that drive crypto innovation, blockchain technology and entrepreneurs offshore only lessen the ability of the United States to lead geopolitically and from the standpoint of monetary policy.”

This development comes after recent revelations that BRICS members — Brazil, Russia, India, China and South Africa — are working on creating their own currency to facilitate trade. Speaking to Cointelegraph, Mark Lurie, CEO of DeFi software company Shipyard, said that commodities-backed currencies used for settlements — such as the ones planned by BRICS countries — are not intended to replace the United States’ dollar dominance.

“While investors are increasingly distrustful of the Fed, neither investors nor the BRICS themselves will necessarily trust the Russia-led governing body of such a currency not to devalue itself. […] Ultimately, it’s not trust but relative trust that matters most,” said Lurie. 

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Source : Cointelegraph.com