Key Insights
- Russia is actively using cryptocurrency exchanges like Garantex and Exved to bypass Western sanctions and build a parallel financial system.
- New Russian legislation integrates cryptocurrencies into international trade, with plans to launch a digital ruble by 2025.
- Russia’s collaboration with BRICS and Iran further strengthens its strategy to evade Western financial restrictions through blockchain technology.
Russia is turning to cryptocurrency exchanges to sidestep Western sanctions imposed after it invades Ukraine. The Central Bank of Russia (CBR) plans to integrate these exchanges into its international trade operations. By leveraging services like Garantex and Exved, Russia can conduct cross-border transactions without relying on traditional financial systems.
These platforms operate on decentralized blockchains, allowing Russia to facilitate global trade. Besides, using cryptocurrency offers the Russian government a potential pathway to skirt sanctions imposed by Western nations.
Crypto Legislation Supports International Trade
New Russian legislation is paving the way for the integration of digital assets into international trade. The CBR, which previously opposed domestic crypto usage, is now leading efforts to bypass financial restrictions. The testing of the digital ruble, Russia’s central bank digital currency (CBDC), is already underway and is expected to launch in 2025.
According to a Chainalysis report, centralized cryptocurrency exchanges such as Tetchange, 100btc, Bitzlato, Suex, and Garantex are being used to avoid sanctions. Garantex, known for its deep liquidity across major blockchains, is a key player in this strategy. This usage represents a significant shift in how Russia approaches global financial exchanges.
Exved and InDeFi Bank’s Role in Trade Operations
Another major player in this effort is Exved, which has been instrumental in managing imports and exports for Russia. The company works closely with InDeFi Bank, founded by prominent Russian figures Sergey Mendeleev and Alexander Lebedev. This collaboration is part of a broader network designed to counteract sanctions and ensure financial transactions can continue uninterrupted.
Although using these exchanges adds complexity to tracking financial transactions, blockchain transparency still reveals insights into Russia’s strategies. Russia’s collaboration with nations such as Iran and the BRICS alliance also suggests the possibility of creating alternative financial structures, including stablecoins backed by gold.
Challenges Ahead for Russia’s Financial System
Despite these efforts, Russia’s Financial Messaging System of the Central Bank of Russia (SPFS), an alternative to SWIFT, has seen limited adoption. The government’s earlier ban on using cryptocurrencies for domestic payments has not been lifted. However, Russia’s focus remains on leveraging blockchain and digital assets for international operations.
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