Finance

Russia legalizes crypto for cross-border trade amid sanctions

Published

3 months ago

August 1, 2024

Illustrative image of two commemorative bitcoins seen in front of the national flag of Russia displayed on a computer screen.

Artur Widak | Nurphoto | Getty Images

Russian lawmakers on Tuesday approved a new law permitting the use of cryptocurrency for international payments, as the country faces ongoing financial pressure from Western sanctions.

The State Duma, which is the lower house of the Russian Parliament, on Tuesday gave the initial greenlight to the new legislation, which would allow businesses to use cryptocurrencies for cross-border trade, local media reported.

“We are taking a historic decision in the financial sphere,” Anatoly Aksakov, the head of the Duma, told lawmakers Tuesday, according to reporting from news agency Reuters.

Mati Greenspan, CEO of crypto market research firm Quantum Economics, said Russia warming to crypto made sense as bitcoin transactions “cannot be censored or blocked by any government or bank,.”

“Previously, Russia would not want to allow that kind of transactional freedom to its citizens — but now we’re at the point that bitcoin is used so often in every day commerce that the opportunity cost for them not to allow it is simply too great,” he added.

Bitcoin prices have more than doubled in the past year amid optimism over the approval of the first U.S. spot bitcoin — and, more recently, ether — exchange-traded funds, as well as the so-called halving event which reduces the supply of newly issued tokens.

The world’s largest digital currency is currently worth $66,000, according to CoinGecko data, up over 120% in the last 12 months.

Under pressure from sanctions

Growing tensions between Russia and the U.S. and its allies have led to innumerable sanctions on individuals and entities in Russia in retaliation to its assault on Ukraine.

The U.S., European Union and Britain are among the jurisdictions that imposed sanctions on Russia after its February 2022 invasion of Ukraine. They’ve continued to amp up pressure on the country, targeting President Vladimir Putin, Russia’s financial sector, and countless oligarchs.

In addition to passing legislation allowing Russian firms the ability to transact internationally via crypto, the Russian central bank will also be given permission to move money overseas using private digital currencies.

Elvira Nabiullina, the Russian central bank governor, said Tuesday that crypto-based payments would begin taking place before the end of 2024.

“We are already discussing the terms of the experiment with ministries and departments, with businesses, and we expect that the first such payments will take place before the end of this year,” she said.

The central bank’s commitment to use crypto as a method of cross-border payment marks a reversal from the regulator’s previous stance on the technology.

In January 2022, the Russian central bank proposed banning the use of crypto for transactions, as well as the mining of digital currencies, citing threats to financial stability, citizens’ wellbeing and monetary policy sovereignty.

Separately, Russia is also exploring the implementation of a digital version of the ruble. Central Bank Governor Nabiullina said Tuesday that the regulator will look to move away from a pilot phase toward mass implementation of the digital ruble from July 2025, Russian news agency Interfax reported.

Central bank digital currencies, or CBDCs, are different from crypto. Unlike bitcoin and other cryptocurrencies, which have no central authority governing them, CBDCs are issued by directly by a government and are designed to replicate fiat currencies in the form of a digital token.

Can crypto help countries evade sanctions?

Quantum Economics’ Greenspan said that Russia’s move to accept crypto “makes total sense from a global trade perspective.”

This will, he added, “help the Russians open up cross border payments with countries and businesses that would otherwise be closed to them due to U.S. sanctions.”

Other sanctioned countries have frequently attempted to circumvent such financial curbs through the use of cryptocurrencies. North Korea, for example, has on multiple occasions been accused of raising millions of dollars in crypto to help fund various state programs and evade foreign sanctions.

North Korean state-backed hacking group Lazarus was behind a huge heist on the Ronin Network — a blockchain that supports a popular nonfungible token (NFT) game called Axie Infinity. The hack saw cybercriminals make off with over $600 million worth of digital tokens, blockchain analysis firms Elliptic and Chainalysis have said previously.

Iran, too, has been accused of exploiting digital currencies to bypass international trade barriers.

Proponents of cryptocurrencies, on the other hand, also claim that the digital assets are a useful tool for countering illicit activities. That’s because the networks that underpin them, called blockchains, are public and show a historical record of transactions that is cryptographically secure and can’t be altered.

Finance

After rejecting Google takeover, Wiz says will IPO when ‘stars align’

Published

1 hour ago

October 18, 2024

Business Finance News

Wiz co-founder discusses the company's expansion into the UK

LONDON — Cybersecurity firm Wiz is seeking to hit $1 billion of annual recurring revenues next year, the company’s billionaire co-founder Roy Reznik told CNBC, adding that the firm will go public “when the stars align.”

Wiz makes software that connects to cloud storage providers like Amazon Web Services or Microsoft Azure and scans for everything it stores in the cloud, helping organizations identify and remove risks in their cloud environments. It was founded by four Israeli friends while they served in 8200, the intelligence unit of Israel’s army, and most of Wiz’s engineering personnel are still based in Tel Aviv, Israel.

Earlier this year, the company rejected a $23-billion acquisition bid from Google, which would have marked the tech giant’s largest-ever takeover. At the time, Wiz CEO Assaf Rappaport said the startup was “flattered” by the offer, but would remain an independent company and aim to list instead.

Speaking with CNBC at Wiz’s new office space in London, Reznik said that the company has received offers from “many people that want to get their hands on Wiz stock” — but that, while “very flattering,” the firm still thinks it can do it alone by going public.

“We’ve already broken a few records as a private company, and we believe we can also break a few more records as an independent public company as well,” Reznik said.

Four-year-old Wiz has raised $1.9 billion in venture capital to date, including $1 billion secured this year in a funding round led by Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital at a valuation of $12 billion.

In 2022, Wiz said it had reached $100 million in annual recurring revenue (ARR), up from just $1 million in 18 months. At the time, the startup said it was “the fastest software company to achieve this feat.”

Reznik, who is the vice president of research and development at Wiz, said the firm now hopes to double from the $500 million of ARR it achieved this year and hit $1 billion in ARR in 2025, which CEO Rappaport cited as a key condition before the company goes public.

UK expansion

Wiz has been expanding its presence internationally, with a particular focus on Europe, from where it sources 35% of its revenues. Last month, the firm opened its first European office in London.

“I think the talent here is amazing, and the ecosystem is amazing,” Reznik told CNBC. “We have always been very much involved in Europe — and specifically the U.K. — and I feel like it’s a natural evolvement of Wiz to double down even more here in London and the U.K.”

The U.K. represents a major growth opportunity when it comes to cybersecurity, Reznik said, adding that recent events like the cyberattack on National Health Service hospitals and an incident affecting Transport for London have “roof topped” the level of interest in the kinds of products Wiz offers.

“The cloud market is going to reach $1 trillion over the next next few years,” Reznik, who moved from Israel to the U.K. just three months ago, told CNBC. “This year is going to be around $700 million, while security is just 4% out of that, I would say. So that makes it a $30 billion market, which is huge.”

Speaking about the U.K. market, Reznik said: “We see a lot of interest here. Many of the largest banks and retailers, are Wiz customers. But we’re also seeing a huge potential for growth.”

Wiz’s customers include online retailer ASOS and digital bank Revolut as customers in the U.K.