MOSCOW - On Tuesday, Russian lawmakers approved a bill permitting businesses to engage in international trade using cryptocurrencies, aiming to bypass Western sanctions following Russia's invasion of Ukraine.

The legislation, which is set to take effect in September, has the support of Russian central bank Governor Elvira Nabiullina.

Nabiullina stated that the initial cryptocurrency transactions are expected before the year ends.

The law comes in response to significant delays in international payments with key trading partners like China, India, and the UAE due to increased caution from banks under Western regulatory pressure.

Anatoly Aksakov, head of the Duma lower house of parliament, described the decision as historic for Russia's financial sector.

The central bank will establish an ‘experimental’ infrastructure for crypto payments, with further details pending.

The law also addresses cryptocurrency mining and the circulation of digital assets, although the domestic ban on cryptocurrency payments remains.

Recent payment delays have significantly impacted Russia's economy, contributing to an 8% drop in imports in Q2 2024, despite efforts to adopt partner currencies and alternative BRICS payment systems.

Persistent use of dollars and euros through the SWIFT system still poses secondary sanctions risks, challenging compliance for banks involved in Russian trade.