Cryptocurrencies in Russian Exports: A New Stage in Foreign Economic Activities

The legislative approval for using cryptocurrencies in foreign trade (FT), which came into effect in August 2024 as part of an experimental legal framework, opens new opportunities for businesses.

How do Russian exporters use cryptocurrencies?

Due to their decentralized nature and independence from traditional financial institutions, cryptocurrencies have become an appealing alternative.

Currently, the mechanism operates as follows: Russian exporters receive payments for their goods or services in cryptocurrency from foreign partners. Non-resident entities, acting as payment agents (PAs), play a crucial role here. These agents establish branches in Russia, ensuring the legality and transparency of operations.

The process is as follows:

 1. Conclusion of a Trilateral Agreement: An agreement is made between the Russian exporter, the foreign buyer, and the payment agent, regulating all aspects of the transaction.

2. Payment in Cryptocurrency: The Russian exporter receives payment in cryptocurrency from the foreign buyer through the payment agent. The type of cryptocurrency can vary based on the parties’ agreement.

 3. Conversion to Fiat (if necessary): The payment agent can convert the received cryptocurrency into fiat currency and transfer it to the Russian exporter at the exchange rate specified in the agreement, thus avoiding risks associated with cryptocurrency market volatility.

 4. Transparency and Control: The Russian Federal Tax Service monitors the entire payment chain, ensuring legality and compliance with tax legislation. The foreign regulator only sees the agent’s payment for goods or services, which excludes direct visibility of the cryptocurrency transaction.

Advantages of Using Cryptocurrencies in FT:

 – Faster Payments: Cryptocurrency transactions generally process faster than traditional bank transfers, reducing payment wait times.

– Lower Fees: In some cases, transaction fees for cryptocurrencies may be lower than bank transfer fees.

 – Enhanced Security: Blockchain technology enhances transaction security and reduces fraud risks.

– Partial Anonymity: Although complete anonymity is absent, cryptocurrency payments offer a higher level of confidentiality compared to traditional bank transfers.

Risks and Limitations: Despite these benefits, using cryptocurrencies in FT comes with certain risks:

 – Market Volatility: Cryptocurrency exchange rate fluctuations can lead to financial losses.

 – Regulatory Risks: While the use of cryptocurrencies in FT is permitted in Russia, the legal framework is still evolving.

 – Technical Complexity: Not all companies have the necessary technical expertise and infrastructure to work with cryptocurrencies.

 Conclusion:

 The use of cryptocurrencies in Russia’s foreign trade is a new development that offers exporters new opportunities. Despite the existing risks, the advantages of speed, relatively low fees, and the potential to circumvent sanctions make cryptocurrencies an attractive tool for international transactions. However, for this method to be effective, a careful risk analysis and the selection of reliable partners, including experienced payment agents, are essential. The further development of the legal framework and cryptocurrency market infrastructure in Russia will play a decisive role in determining the extent of digital currency usage in FT.