Legalization of cryptocurrencies as a payment method
The global siege that Russia is experiencing due to the war, also in the economic field, has led it to explore options such as a possible legalization of cryptocurrencies as a payment method in the country. This was announced by the Russian Ministry of Industry and Trade, Denis Manturov, who said that both the Central Bank of Russia and the Government are “actively involved” in this matter. “The question is when this will happen, how it will happen and how it will be regulated,” he said, according to Interfax agency.
“Everyone is inclined to understand that this is a trend of the times, sooner or later, in one format or another, this will take place, but I repeat: it must be legal, correct, in accordance with the requirements and rules that will be formulated first of all by the Central Bank and, of course, by the Government,” Manturov added.
For the time being, the Russian Central Bank has maintained a tough stance against cryptocurrencies as a method of payment, since their volatility is an aspect that worries the highest echelons of the financial organization. Currently, countries such as the Democratic Republic of Congo and El Salvador have adopted Bitcoin, one of the main cryptocurrencies, as an official payment method and, in fact, the Central American nation has announced the acquisition of 2,3000 bitcoins since September.
In parallel, Moody’s rating agency has warned that the adoption of cryptocurrencies could lead to excessive fragmentation of the payment system and weaken financial stability, especially in countries with weaker macroeconomic frameworks.
The Investment Service of this agency assured that cryptocurrencies are increasingly being used by countries with lower sovereign debt ratings, as they can facilitate household transactions and make them faster, more convenient and with lower costs.In addition, Moody’s points out that cryptocurrencies facilitate inclusion and benefit countries where a large part of the population lacks banking infrastructure, especially with the expansion of cell phone use and the further increase in digitalization. However, it warns that “this growing adoption of digital assets also puts macroeconomic stability at risk.”
“The risks associated with cryptocurrency adoption could increase macroeconomic instability for sovereign countries with weaker macroeconomic frameworks, particularly where cryptocurrencies can be used to evade capital controls, weakening policy effectiveness,” Moody’s vice president David Rogovic said, quoted in a statement.
Among the risks it cited are operational ones, such as fraud, reduced government control in the oversight of the financial system, less central bank control over the money supply or greater difficulty in implementing countercyclical monetary policies in times of crisis. Moody’s notes that remittances represent another area where cryptocurrency can be an alternative to traditional remittance currencies, particularly in remittance flows from less developed markets, as they offer the potential to send remittances faster and reduce costs.