Russia's central bank sees space for crypto in international trade

FILE PHOTO: National flag flies over the Russian Central Bank headquarters in Moscow, Russia May 27, 2022. REUTERS/Maxim Shemetov/File Photo

(Reuters) -Russia’s central bank is open to allowing the use of cryptocurrency for international payments, a senior bank official said on Tuesday, in a sign of a possible relaxation of its opposition to digital currencies.

“In principle, we do not object to the use of cryptocurrency in international transactions,” the central bank’s First Deputy Governor Ksenia Yudaeva said in a briefing with reporters.

But Yudaeva reiterated that the bank, as the regulating authority, continues to see the wider use of cryptocurrency in Russia as a financial threat.

“We still believe that the active use of cryptocurrency within the country, especially within Russia’s financial infrastructure, creates great risks for citizens and users. We believe that in our country those risks could be reasonably large,” she said.

Russian officials are wrestling with how to regulate the country’s crypto market and use of digital currencies, with the central bank previously calling for a blanket ban.

Discussions have been going on for months, though no consensus has been reached among different government departments and lawmakers.

The finance ministry said last week that allowing cryptocurrency to be used to settle international payments would help Russia counter the impact of Western sanctions imposed since Moscow sent tens of thousands of troops into Ukraine, which have cut several Russian banks off from the global financial network.

Yudaeva also said overall risks to financial stability in Russia as a result of Western sanctions imposed on Russian lenders had declined as banks now had ample foreign currency liquidity.

Reporting by Reuters; Editing by Kevin Liffey and Jonathan Oatis