To maintain access to international markets in the face of Western economic pressure, Russia is increasingly turning to noncurrency payment schemes. The state has strong incentives to obscure its transactions and reduce reliance on fiat currencies (such as the dollar or euro) to evade sanctions and avoid scrutiny. This month, the head of Rosfinmonitoring, Russia’s anti-money-laundering agency, publicly informed President Vladimir Putin that the government is reorienting international trade towards the Middle East, Southeast Asia, and Central Asia, and developing alternatives to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) international banking network with the former Soviet republics that are members of Commonwealth of Independent States. Russia also is “actively employing” alternative means of payment including gold, cryptocurrency, and netting, where multiple payments are consolidated to reduce the number of transactions and limit exposure. While these initiatives may be new, Russia’s use of cryptocurrency builds on a long history of nonfiat and illicit trade practices that have shaped its engagement with global markets.
Russia’s Use of Crypto Schemes (John Kennedy, Edward Bryan, Illimar Ploom, Viljar Veebel – RAND Corporation)
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