This week, Russia’s parliament published a draft law as part of an experimental regime to support the use of digital assets for cross border payments to help with sanctions.
With Russia’s inability to use dollars and euros for payments, many transactions are being settled in foreign currencies, even though contracts are in euros and dollars. This is creating considerable foreign exchange risk. One alternative is to swap assets rather than using currencies or barter. A more efficient way of doing this is to tokenize precious metals and other assets and use these for settlement.
Russia has a legal framework for digital financial assets that are tokenized traditional financial instruments or real world assets. To date, a small number of institutions, including Sberbank, have tokenized trade finance debts and precious metals. However, these tokens are not meant to be used for payments. Hence, additional legislation is needed to allow their use for cross border settlements.
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