El Salvador Suggests Cryptocurrency Transactions with Russia in Response to Sanctions

El Salvador has put forward the idea of leveraging digital currencies such as Bitcoin to facilitate trade with Russia, bypassing the severe economic sanctions levied against Moscow.

This notion was disclosed by Alexander Ilyukhin, Russia’s first secretary at the Nicaraguan embassy and head of its El Salvador office, during a conversation with the Russian government-affiliated media organization Izvestia.

Crypto Trade Strategies

El Salvador’s proposal to utilize cryptocurrency is intended to mitigate the restrictive effects of sanctions as well as logistical difficulties experienced with traditional trading methods. Although the export figures from Russia to El Salvador have been relatively consistent, there has been a noticeable plunge in their imports.

The adoption of trade methods based on cryptocurrency could forge a viable pathway through these economic blockades. Ilyukhin expressed:

“Due to El Salvador’s adoption of the U.S. dollar as its official currency, the process to settle transactions can be quite arduous. Hence, they are pitching the idea of utilizing cryptocurrencies for trade operations.”

El Salvador has the distinction of being the inaugural country to make Bitcoin a legally accepted currency in 2021, which unmistakably demonstrates its support for the crypto realm. This commitment is supported by its consistent Bitcoin investments and a series of legislative measures bolstering the industry.

However, Ilyukhin also acknowledged the challenges that might confront Russia, given that in early 2021, crypto as legal tender was prohibited. He stated:

“The spread of Bitcoin within our country is not extensive, thus we are looking into alternative avenues to invigorate our trade ties.”

Notwithstanding these hurdles, some analysts are of the opinion that such a proposal has the potential to surmount the trade restrictions emanating from Western-imposed sanctions. These sanctions have led to trade disruptions with key commercial associates like China, partly because of the heightened caution exercised by local banks.

Russian Crypto Engagement

In a turn towards more crypto-friendly legislation, the Russian State Duma recently ratified a bill that legitimizes Bitcoin mining and authorizes the employment of cryptocurrencies for international transactions.

Russian legislative member Anton Gorelkin, who also serves as Deputy Chairman of the State Duma’s Committee on Information Policy, underlined the importance of this bill in a Telegram update. He pointed out the progress, stating:

“The clause that prohibited the facilitation of cryptocurrency exchange was successfully omitted, as it was raising considerable concern among industry insiders. While the ban on the advertising of digital currencies remains intact, it will be accounted for in the upcoming emendations to the Federal Law ‘On Advertising.’”