Russia’s central bank might legalize stablecoins for trades with China: report

The Bank of Russia is considering approving stablecoins for cross-border trades, as local businesses explore alternative methods to conduct trade with China amid sanctions.

Russia‘s central bank, the Bank of Russia, is considering the legalization of stablecoins for cross-border transactions as the sanction-torn country’s economy is seeking alternative ways to keep trading activity with China.

In an interview with Russia’s state newspaper Izvestia, central bank deputy governor Alexei Guznov said the proposal is under discussion and has been formulated, adding that the eventual goal is to regulate the entire process chain that would enable individuals to “transfer these assets into Russia, accumulate them, and use them for international payments.”

Guznov indicated that the initiative could potentially transition from a temporary experiment to a permanent regulatory framework, although specifics regarding the timeline for approval weren’t disclosed.

Stablecoins, unlike traditional cryptocurrencies like Bitcoin (BTC), are typically backed by assets and have a central issuer, which addresses concerns that previously led the Bank of Russia to oppose legalizing digital assets. However, recent shifts suggest the central bank is adjusting its stance as even major Russian metal producers reportedly started using stablecoins for transactions with China as traditional payment methods face severe limitations due to sanctions.

Despite these developments, questions remain about how the legalization of stablecoins would navigate international sanctions compliance, particularly since Tether has expressed willingness to adhere to sanctions policies.

Most recently, in a bid to emphasize its commitment to comply with international sanctions, Tether collaborated with Chainalysis to identify wallets that “may pose risks or may be associated with illicit and/or sanctioned addresses.”