Bank of Russia considers stablecoins for international payments

The Bank of Russia is exploring the use of stablecoins for cross-border transactions, aiming to integrate them within the country’s financial system.

Alexey Guznov, State Secretary and deputy governor of the central bank, disclosed in an interview with Izvestia that the central bank is evaluating the potential of using stablecoins for international financial transactions.

This initiative would initially involve a select group of qualified investors.

Under the current legal framework, these stablecoins would be classified as digital financial assets (DFAs) if they are backed by a responsible entity.

Guznov emphasised that stablecoins could be viable for cross-border payments within existing digital asset regulations.

However, he made a distinction between stablecoins managed by a responsible entity and those calculated by algorithms, suggesting that algorithm-based stablecoins resemble digital currencies more closely.

The use of these algorithm-based stablecoins for cross-border settlements would require initial testing to determine their suitability within the regulatory framework.

This exploration aligns with a new law recently enacted in Russia, which pertains to cryptocurrency mining and its role in cross-border transactions.

The law allows for these transactions to be conducted within a regulatory sandbox through authorised entities, providing a controlled environment for innovation.

Guznov highlighted the importance of rapidly adopting the regulatory sandbox program and associated laws.

The pilot phase will involve using designated platforms to facilitate cross-border transactions with digital currencies.

The Bank of Russia plans to gradually expand the initiative to include a broader group of qualified investors, potentially reshaping the landscape for international payments under Russian regulations.