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- Russia is set to start a trial for cross-border payments in digital tokens in September to ease the pain of crippling sanctions, sources tell Bloomberg.
- Only a scalable blockchain network with low fees and real-time transactions can serve the country, which has over 144 million residents, making XRP one of the best candidates for the role.
Since the conflict with Ukraine started, Russia has become the world’s most sanctioned nation. For months, the government has relied on short-term fixes, which have helped prop up the ruble and keep the financial system afloat. However, the weight of global isolation is catching up with Russia, and sources now say that the government is exploring crypto.
According to sources who spoke to Bloomberg, Russia intends to start the trial on Sunday. It will rely on its National Payment Card System to facilitate the swap between the country’s ruble and crypto tokens.
The system was created in 2014 to provide faster and cheaper payments for Russians. Today, it underpins the country’s interbank payment systems and the Mir, the national card payment network. According to the two sources, the government picked the system as it already contains instant payments and features like interbank clearing, making it easier to integrate with all existing financial rails. The system is also operated and regulated by the central bank, giving the government added confidence.
The move, which hasn’t been made official or public at press time, is no surprise. President Vladimir Putin’s administration has been softening its stance on crypto in recent months. Last month, legislators legalized crypto mining in the country, as we reported. The lawmakers also laid the groundwork for the testing of digital tokens for payments.
Two weeks ago, Finance Minister Anton Siluanov revealed that the government was working on legalizing crypto exchanges. However, he clarified that suitable regulations had yet to be formulated to make this possible.
“We haven’t found a solution yet on how to do this,” he said.
Crypto to Evade Crippling Sanctions—Does XRP Offer the Best Alternative?
Crypto might be Russia’s best to evade sanctions. While these sanctions encompass every fabric of the country’s economy, Western nations have mainly targeted Russia’s money, seeking to limit the country’s ability to send or receive money.
According to the BBC, the sanctions have frozen around $350 billion of Russia’s foreign currency (which accounts for half the country’s total reserves). 70% of the country’s banks have been frozen from the global economy, including being restricted from SWIFT.
Crypto offers a decentralized option whose access can’t be restricted by centralized entities, and sanctioned countries, including China, Russia, Iran, and Venezuela, are increasingly exploring it as an option.
Of the 10,000+ cryptos that Russia can turn to, XRP offers the best alternative. For one, XRP is already a massive player in the global movement of money, with its products and networks being integrated by some of the world’s largest financial institutions. In some countries like Japan, over 80% of the banks are working on integrating crypto. Its low fees, instant transactions, and robust ecosystem make it superior to its peers.
XRP trades at $0.5913, losing 0.6% in the past day.
