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Russia to Legalize USDT for International Transactions, USD Out.

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The Russian government plans to officially legalize Russia USDT for international transactions to facilitate cross-border payments for Russian companies despite the country’s recent moves to drop the US Dollar.

According to the news site Izvestia, the Central Bank of the Russian Federation (CBR) plans to implement stablecoins for international payments since they are pegged to stable currencies like the US dollar or gold, and are less volatile than other cryptocurrencies.

Deputy Governor of the Central Bank of Russia, Alexey Guznov, mentioned that the bank has formulated proposals. As the country intends to make the arrangement a permanent one and not just a temporary regulation, Russia plans to regulate the entire transaction chain.

The regulatory framework will cover the transfer of stablecoins into Russia, the storage of the assets, and utilizing them for cross-border payments. Guznov stressed the need to regulate stablecoins, citing their similarities to digital financial assets (DFAs) and cryptocurrencies.

Alexander Murychev who is the Executive Vice President of the Russian Union of Industrialists and Entrepreneurs (RSPP), and also the Chairman of the Council of the Association of Regional Banks of Russia stated in the report that stablecoins show great potential for cross-border transactions.

Murychev believes that stablecoins will increase liquidity and long-term resources for the market and will serve as a good instrument for transactions with BRICS countries (Brazil, Russia, India, China, and South Africa).

President Vladimir Putin took steps to legalize digital financial assets (DFAs) for international payments in March 2024, but foreign companies have stalled its implementation due to concerns over secondary sanctions.

Therefore, the  Russian government is focused on implementing stablecoins for international transactions since the Russian DFAs are not yet aligned with the global crypto market. 

Why Russia Choose USDT Over US Dollar?

Russia announced in April that it is in the final stage of dropping the US dollar in its bilateral trade with China, successfully switching 95% of their transactions to rubles and yuan to break free from the US financial system’s grip.

However, Russia’s pursuit of de-dollarization is somewhat paradoxical since the government is contemplating legalizing stablecoins tied to the US dollar.

In other news, the two countries pursuing de-dollarization, Russia and China, have collaborated to deal with Ukraine and its allies through cyberattacks.