On March 11, Russian President Vladimir Putin approved a groundbreaking law allowing the use of digital money and CBDCs for global payments. This move aims to assist Russian companies in navigating around Western sanctions and boosting trade with friendly nations.

The Russian parliament speedily passed the bill on digital payments. The financial market committee of the State Duma initially gave the green light to the text on February 21. Subsequently, the lower house reviewed the bill in late February, followed by the upper house, the Federation Council, ratifying it on March 6.

Anatoly Aksakov, head of the financial market committee, emphasized on February 27 that the law was necessary due to the current absence of rules guiding the use of digital money for international payments. It's important to note that this law does not cover cryptocurrencies like Bitcoin, which are not recognized as legal tender in Russia.

As soon as the law is officially published, it will come into effect, except for certain provisions that will be enforced later. This regulatory framework will enable the use of digital money for overseas trade transactions.

Aksakov believes this law will improve the efficiency of Russian importers and exporters in cooperating with friendly nations and dampening the impact of sanctions. Several of Russia's allies have also shown keen interest in using digital money and CBDCs in their trade dealings with Moscow.

Central Bank of Russia Gains New Powers

The law signed by Putin empowers the Central Bank of Russia with fresh regulatory control over the payment industry. Being the exclusive issuer of the digital ruble and the primary overseer of Digital Financial Assets (DFAs), the bank will now have the authority to supervise transactions involving these assets.

Entities issuing DFAs must furnish the Central Bank with details on asset recipients, while businesses using DFAs and CBDCs for payments will be required to keep a record of all transactions in a new dedicated system.

Russian laws recognize various digital assets as DFAs, including digitized goods, securities, digital rights, and digitized monetary claims. Investors will also have the opportunity to purchase digital stakes in private Russian firms.

While Russia is not the first country to use CBDCs for global transactions, this law represents a significant milestone for Russia in its pursuit of financial independence amidst external restrictions. By authorizing the use of digital money and the digital ruble for international payments, Moscow hopes to ease trade with its partners and create new opportunities for its businesses.

Nevertheless, some experts advise caution, pointing out that recording all DFA transactions in Russian systems and the lack of provisions for foreign DFAs might pose challenges for non-Russian trading associates.