Using cryptocurrencies to overcome sanctions in the payment sector: international experience and opportunities for Russia

Objective: to study the international experience of using cryptocurrencies to overcome financial sanctions in the payment sector and the possibility of its application in international settlements in Russia.

Methods: to achieve the set objective, the article uses analysis, synthesis, induction and deduction. Analytical and statistical information from foreign financial institutions was used to assess the prospects for using cryptocurrencies in the payment sector in order to offset the negative effects of sanctions restrictions.

Results: the authors identify the supply and demand factors that determine the scale of introducing cryptocurrencies into the payment turnover of the sanctioned countries. Having analyzed Iran and Venezuela experience, they describe two models of using cryptocurrencies: state-controlled (Iran) and market-oriented (Venezuela), and show the limits of their effectiveness. They established that in Russia, the use of cryptocurrencies to overcome sanctions is limited by the high dependence on a centralized crypto infrastructure supervised by Western regulators and the lack of regulated channels for the input/output of fiat funds. The study proved that cryptocurrencies can act only as an auxiliary, rather than a systemic tool for diversifying cross-border settlements. Recommendations for the Bank of Russia on the regulation development include the integration of cryptocurrency service providers into the prudential supervision perimeter.

Scientific novelty: it consists in systematizing the international experience of using cryptocurrencies under sanctions and identifying on this basis two institutional models (Iranian and Venezuelan), differing in the degree of state control and the role of decentralized infrastructure. The authors proposed an approach to assessing the limits of cryptocurrencies’ applicability in cross-border settlements, taking into account not only regulatory but also infrastructural constraints, including dependence on centralized exchanges subject to sanctions regimes.

Practical significance: the developed recommendations can be used by the Bank of Russia in forming the regulatory framework for cryptocurrency settlements under the experimental legal regime, as well as in making decisions regarding the use of cryptocurrencies in cross-border transactions and foreign economic transactions.

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