Rosbank, one of Russia’s largest banks, is reportedly considering using cryptocurrency to conduct cross-border transactions and skirt sanctions.
According to a representative of the bank, the institution has already begun pilot transactions with corporate and private clients using a fintech service specializing in international payments in digital currencies called B-Crypto, Russian newspaper Vedomosti reported last week.
To use the service to pay for imported goods or services in cryptocurrency, Russian companies must first undergo a Know Your Client (KYC) verification process in both Rosbank and B-Crypto.
Then, the importer and B-Crypto would sign a contract, followed by the client depositing fiat in Rosbank to purchase cryptocurrency and placing an order. The bank transfers the funds to B-Crypto, which purchases the cryptocurrency and sends it to the foreign supplier.
While no other top 50 Russian banks have confirmed providing such services, Vice President of the Association of Russian Banks, Alexei Voilukov, stated that cross-border cryptocurrency transfers are the business of small banks.
He claimed that, among major credit institutions, such services have yet to emerge as they are not profitable for them due to a lack of cryptocurrency liquidity required to service large-scale client operations.
Sanctioned Bank Rosbank to Use Crypto to Dodge Sanctions
Last year, the US Treasury Department sanctioned Rosbank and its owner, oligarch Vladimir Olegovich Potanin, who Bloomberg lists as Russia’s richest man.
“By sanctioning additional major Russian banks, we continue to deepen Russia’s isolation from global markets,” the Treasury’s Under Secretary for Terrorism and Financial Intelligence Brian Nelson said in the statement at the time.
However, the bank is now exploring the use of cryptocurrencies in a bid to bypass sanctions.
Russia has long planned on using crypto to bypass sanctions
Back in September, Russia’s Deputy Finance Minister said that the Ministry of Finance & the Central Bank mostly agreed on a bill allowing international crypto payments
It seems like the plan is almost fully realized https://t.co/FWQIXtHRHi
— Live Coin Watch • Live Crypto Analytics (@LiveCoinWatch) May 29, 2023
Meanwhile, the deputy chairman of the Central Bank of Russia, Vladimir Chistyukhin, said that although cryptocurrency will not become a panacea for international payments, everything should be done to use any means of settlement with foreign partners.
The Central Bank plans to test cross-border payments using cryptocurrency mined through authorized organizations after the adoption of a bill to legalize mining and experimental legal regimes currently in the State Duma.
Asian Countries Join Forces to Ditch the Dollar
While Russia is considering using cryptocurrencies to avoid the US dollar, the country and other nations are also increasingly calling for a plan to ditch the dollar.
The leaders of 10 Southeast Asian nations and the members of the Association of Southeast Asian Nations (ASEAN) have agreed to promote their native currencies for cross-border transactions, reducing settlement in the US dollar.
The group, which consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, wants to “encourage the use of local currencies for economic and financial transactions.”
There have also been calls to move away from the dollar in Africa, with President William Ruto of Kenya urging African countries to ditch the US dollar.
“We are all struggling to make payments for goods and services from one country to another because of differences in currencies. And in the middle of all these, we are all subjected to a dollar environment,” Kenya’s president said, adding:
“We do not have to look for dollars; our businessmen will concentrate on moving goods and services, and leave the arduous task of currencies to Afreximbank.”
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