Russia’s sanctioned business union mulls establishing national Bitcoin fund

As a seasoned crypto investor with a keen interest in global financial developments, I find the Russian Union of Industrialists and Entrepreneurs (RSPP) considering the launch of a national Bitcoin fund to facilitate foreign trades an intriguing development. With my experience in navigating the ever-evolving crypto landscape and keeping abreast of geopolitical events impacting this space, I am eagerly following this story.

Russia’s authorized business organization is pondering over establishing a national Bitcoin fund to boost the adoption of digital currencies in international commerce.

The Russian Union of Industrialists and Entrepreneurs (RSPP), an authorized Russian organization representing affluent businesspeople, is pondering over establishing a national cryptocurrency fund. This fund would enable Russia’s businesses to utilize cryptocurrencies for international transactions as they seek alternative solutions to bypass Western sanctions.

Andrey Lisitsyn, the managing director of financial policy and financial markets at RSPP, spoke with Russian newspaper Vedomosti about plans to establish a Bitcoin (BTC) fund sourced from locally mined cryptocurrency. The Russian government intends to issue digital financial assets (DFAs), which are centralized digital tokens, backed by this Bitcoin fund. This setup allows for the legal utilization of cryptocurrency in international transactions through IOUs instead of direct deals involving the crypto itself.

To date, DFAs have not made a notable impact in Russia, despite initiatives by various banks to attract retail investors. Elvira Nabiullina, Chair of the Bank of Russia, seems to be placing substantial faith in DFAs, but acknowledged during a press conference in early June that the market is hampered by insufficient liquidity and excessive fragmentation. As of June, the aggregate volume of DFAs had exceeded 96 billion rubles ($1.1 billion), a landmark achievement reached after two years of development.

Lisitsyn proposed an alternative method for conducting cross-border trades using claims to underlying crypto as IOUs, thereby keeping the crypto from circulating and minimizing speculative demand since crypto is illegal tender in Russia. He suggested setting up a fund in a special administrative region where miners could open accounts and deposit their mined Bitcoins.

yet, Lisitsyn acknowledged that implementing the plan would involve opening numerous accounts on diverse international cryptocurrency exchanges for foreign transactions, leading to a substantial concern regarding the possibility of these accounts being restricted. To mitigate this risk, he suggested establishing a system of “payment intermediaries,” but failed to provide further information on their functionality.

As a researcher studying economic sanctions, I can tell you that in August 2023, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on the Russian State Pension Fund (RSPP). OFAC issued a statement explaining that the Russian elites should no longer hold the belief that they can carry on with business as usual while the Kremlin continues its military aggression against the Ukrainian population.

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2024-07-01 15:36