Central Bank of Russia Throws Out Proposal to Use Crypto in Sanctions Evasion

The Central Bank of Russia (CBR) has ruled out the possibility of using cryptocurrency to evade the hefty sanctions imposed on the country following its military invasion of Ukraine in late February.

The latest development came from a statement by the Bank’s First Deputy Governor, Ksenia Yudaeva, as a response to a proposal forwarded by a member of the State Duma, the lower house of the Russian parliament.

Anton Gorelkin, a Russian lawmaker with the ruling United Russia party, previously suggested that the government authorize Russian companies and individual entrepreneurs to settle local and foreign payments using digital currencies. Gorelkin argued that developing a national cryptocurrency infrastructure to combat western sanctions is inevitable.

However, Russian central bankers believe otherwise, arguing that Russian businesses would not be allowed to transfer large amounts of funds using cryptocurrency. Ksenia Yudaeva, a Bank of Russia staff member, explained that regulatory authorities in the UK, US, European Union, Japan, and Singapore have already begun placing infrastructure in place to prevent such use of cryptocurrency by Russia.

Yudaeva also noted that crypto trading platforms now have to adopt restriction measures to deny Russian users access to funds. She added that in jurisdictions where crypto trading platforms are not yet banned, authorities are pushing for stricter KYC adherence.

Central Bank of Russia Alone in Its Stance Against Crypto in Moscow

The CBR has been a stern opponent of cryptocurrency regulation irrespective of sanctions. Earlier this year, the bank proposed a blanket ban on all cryptocurrency-related operations in the country. The financial institution holds that decentralized digital currencies have no place as payment options for goods and services in Russia.

That said, the Bank of Russia now faces isolation from other Russian government institutions on its stance against crypto. In February, Moscow green-lighted a regulatory proposal from the Finance Ministry, which prefers strict monitoring over an outright ban.