A new service that facilitates cross-border settlements with the use of cryptocurrencies has been launched by Rosbank, a financial institution in Russia that has been subjected to sanctions by the United States. This pioneering service makes Rosbank the first-ever Russian bank to introduce a cryptocurrency-powered solution for cross-border settlements. This solution enables importers to utilize their funds to buy cryptocurrencies in foreign markets, which are subsequently sent to the foreign seller.
Cross Border Crypto Payment Solution
This new solution now allows Rosbank clients to use cryptocurrencies for paying for imported goods or services. However, to avail of this feature, clients need to complete a KYC process at both Rosbank and B-crypto. Corporate and private clients are currently testing the solution. Moreover, this initiative is taking place despite the cryptocurrency payment ban in Russia that came into effect in 2021.
There has been a surge in the use of digital currencies for cross-border settlements in recent times, owing to their speed and cost-effectiveness compared to traditional methods. However, concerns about the safety risks and instability of using digital currencies for settlements still persist, as it is a relatively new concept.
Crypto Sanctions in Russia
This development comes after the US government imposed harsh restrictions on Rosbank and other prominent Russian banks to prevent Moscow from funding its invasion of Ukraine. The US Treasury Department’s Office of Foreign Assets Control (OFAC) had labeled Rosbank as a systemically important credit institution in Russia when it announced the restrictions a few months ago.
As per Eduard Davydov, the senior partner at Emet Law firm, Rosbank’s new cross-border solution may face opposition from Western countries who could interpret it as an effort to avoid sanctions. Additionally, some nations are presently incorporating cryptocurrency transactions under their sanctions against Russia.
The US government, through the Biden administration, hinted at the likelihood of enforcing sanctions on Russia’s cryptocurrency market in the aftermath of its invasion of Ukraine in 2022. In response to the West’s swift reaction to Russia’s aggression, Crypto.com and Blockchain.com, among other private crypto entities, also took similar actions.
