Stablecoins continue to see notable adoption as the world’s largest country, Russia, explores the use of stablecoins for international payments in light of increasing financial pressure placed on it by international sanctions and economic hardship.
The move aims to bypass traditional financial channels, underscoring Russia’s strategic shift to digital assets as a way to safeguard its global business operations in the face of ongoing geopolitical tensions. Matthew Sigel, head of digital asset research at VanEck sharing development on the X platform (formerly Twitter) on Wednesday, citing an excerpt from the announcement.
Russia turns to stablecoin for international payments
It is to highlight that stable coins are a type of cryptocurrency intended to maintain a constant value tied to a reserve of assets, such as conventional fiat currencies and gold. They offer a combination of the efficiency and flexibility of digital assets with the stability of conventional financial institutions.
Due to the nature of these coins, Russian authorities believe that these assets are a promising instrument for cross-border transactions, prompting the country to consider accepting stablecoins for its daily activities.
According to the Deputy Governor of the Bank of Russia Alexei Guznov, the ongoing negotiations are aimed at developing measures to regulate stablecoins. The goal of this proposal is to create a legal framework for collecting and using the asset in cross-border payments.
Guznov also stressed that this project could move from an experimental phase to a more permanent regulatory structure. However, it is still necessary to set a deadline for the project’s completion while the central bank ensures that any potential legal issues arising from sanctions and international financial laws are avoided.
“The regulation could have a significant impact on the Russian business environment in international trade, especially with Asian countries,” Guznov added. Russia could thus circumvent some of the restrictions imposed by sanctions on current financial systems by using stablecoins, which are intended for reserve assets and have a central issuer.
RussiaThe idea of adopting stablecoins for global payments has been a major discussion in the country since 2023. Now, following the law passed by Vladimir Putin, the President of Russia, allowing the use of digital financial assets for global payments, the country can finally legalize stablecoin settlements.
Coins expected to see significant growth in Europe
This proposal comes as part of the growing debate around the European Markets in Crypto Assets Act (MiCA). The MiCA highlights the growing importance of clear jurisdiction in the digital asset space, which is set to become a landmark regulatory framework for the cryptocurrency market.
Patrick Hansen, a senior policy executive at Circlehas Free Information on the impact of the law on the stablecoin sector. According to Hanson, 1.1% of euro-denominated crypto transactions are executed using EUR stablecoins, compared to 90% for USD stablecoins. “It may sound strange, but this 1.1% figure is actually an all-time high,” he added.
Although the number was zero a few years ago, Hansen believes it can only increase from now on, and the introduction of MiCA will help make the volumes and liquidity of EUR stablecoins more attractive.
Featured image from iStock, chart from Tradingview.com
