Russia allows crypto for cross-border payments while China expands smart contracts on its e-CNY
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(Kitco News) – Russia’s central bank announced Monday that it has agreed with the Ministry of Finance to legalize the use of cryptocurrencies for cross-border payments.
The central bank has seriously reconsidered its approach to regulating the crypto industry, and this latest development is an admission that crypto payments are inevitable based on current geopolitical conditions.
According to Alexi Moiseev, the country’s deputy finance minister, many Russians rely on foreign platforms to open a crypto wallet, and this is something that needs to be handled domestically with the help of trusted platforms.
“It is necessary to do this in Russia, involving entities supervised by the Central Bank, which are obliged to comply with the requirements against money laundering and Know Your Customer,” Moiseev said.
This announcement marks a shift in the country’s approach to using cryptocurrencies as a payment method. Its 2020 “On Digital Financial Assets” law officially banned the use of cryptos such as Bitcoin (BTC) for payment purposes.
In late 2021, Russian President Vladimir Putin suggested that it was “still too early” to use crypto to facilitate trade in energy resources such as oil and gas.
It seems that the economic sanctions imposed by the West on Russia in response to the invasion of Ukraine have changed this perspective and made crypto a more appealing cross-border payment option.
This was addressed by Moiseev, who noted that the central bank has reconsidered its approach to regulating the industry “given that the situation has changed.” Some reworking of current plans needs to be done; But since the planned infrastructure is “too rigid” to use crypto in cross-border settlements, the official said.
China will deploy more smart contracts for the digital yuan
Meanwhile, in China, The People’s Bank of China (PBOC) has announced that it plans to deploy more smart contracts for its digital yuan after several new use cases emerged from tests conducted on the new digital currency.
In a speech given last Friday by Mu Changchun, director general of the PBOC’s digital currency institute, the official described that smart contracts involving the digital yuan, or e-CNY, have been used in several areas such as government subsidies, retail marketing and prepaid fund management.
This development is consistent with what the institute put out in the e-CNY whitepaper released in 2021, which indicated that the currency would achieve programmability by “deploying smart contracts that do not impair its monetary functions.”
Mu indicated that the next step would be to create smart contract templates and put systems in place that help reduce any risk to economic and financial stability.
“Smart contracts, in this sense, must go through compliance reviews and tests before being made into templates and models,” Mu said, noting that the PBOC is in the process of establishing a platform to review and register smart contract models.
The PBOC initially started pilot trials of e-CNY in Shenzhen in October 2020, and it has since expanded the trials to at least 23 cities and regions.
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