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bne May 2023 Companies & Markets I 21
In search of solutions to avoid sanctions restrictions, Russian Prime Minister Mikhail Mishustin added his name to the roster of Russian high officials endorsing the use of digital money to settle international trade deals in September.
The US, aware that the unregulated and decentralised cryptocurrencies represent a threat to the effectiveness of the SWIFT sanctions on Russia’s ability to make international payments, has already started to try to close the loopholes. The US has already blacklisted a bitcoin and an ether address in February, suspecting their involvement in Russian defence equipment sales abroad, and is examining various crypto- exchanges for their role in sanctions busting.
One of the largest crypto-currency exchange platforms, Binance, announced last April that following the EU’s
fifth sanction package it is “required to limit services for Russian nationals or natural persons residing in Russia,
or legal entities established in Russia, that have crypto- assets exceeding the value of €10,000”. Another exchange, Coinbase, also warned Russian users that their accounts will be blocked on May 31.
Additionally, the European Union imposed a total ban on
carrying out cryptocurrency transactions with Russian citizens and anyone residing in the country as part of its eighth round of sanctions introduced last summer. The US Treasury Department also targeted Swiss-based Russian crypto-currency mining holding BitRiver in September.
But Russia has taken the first step towards international crypto-payment when the Russian Ministry of Industry and the Central Bank of Iran agreed that imports could in theory be processed using crypto-currencies last August.
Iran is another cryptocurrency hotspot, accounting for 4.5% of the global coin mining, according to a study made last year, partly because of the country's cheap electricity.
If it happens, Russia’s use of cryptocurrencies to settle international trade deals won’t happen soon. In May 2022 Moody’s Investor Service warned that crypto-currencies will not help Russia bypass sanctions due to the limited market size and payment-tracing mechanisms. Moody’s believes that the low liquidity of the ruble/bitcoin pair of about $0.2mn makes crypto-currency an unlikely instrument to cover $46bn of daily transactions of Russian financial institutions for the foreseeable future.
Russian Post makes its first loss in nine
years of $350mn due to sanctions
bne IntelliNews
Pochta Rossii (Russian Post) reported its first loss in nine years of RUB27.2bn ($353mn) at the end of 2022, RBC reported on March 30.
A black pit with a famously poor service record, Potcha Rossii was transformed in the boom years during the noughties into a modern and highly profitable service that has important social implications in a country as large as Russia. A banking service was also set up based on its country-wide branch network in partnership with the state-owned VTB Bank.
However, its business has taken a hit thanks to the economic slowdown of the last year and sanctions.
The company's revenue decreased by 4% year on year to RUB208.4bn ($2.7bn), with over half of that revenue coming from postal activities. However, Pochta Rossii suffered a loss on sales of RUB21.9bn, compared with a profit of RUB8.3bn in the previous year.
The company's operating expenses increased by RUB16bn, with a significant portion attributed to logistics costs and equipment servicing.
The decrease in revenue was primarily due to a reduction
in international mail flows, caused by payment difficulties, transport restrictions and the suspension of global brands in Russia, according to a company spokesperson.
Pre-war Russians made heavy use of online shopping and snapped up bargains in European countries, especially during the post-Christmas January sales, causing the Russian post
Russian Post made its first loss in nine years of $350mn after sanctions seriously curtailed its international delivery business. / www.shutterstock.com
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