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Stellar (XLM) Poised To Rally? Ukrainian Bank Reveals Successful E-Money Pilot

The Stellar (XLM) price remains in a long-term downtrend. After seeing an all-time high of nearly $0.81 on May 10, 2021, XLM’s price has fallen massively. Currently, XLM is 90.6% down from its ATH. Since October 2021, Stellar has also been in a descending trend channel.

At press time, XLM was trading at $0.0822. Thus, the price is showing initial signs of strength and could make a first attempt to break through the upper line of the trend channel at $0.10. What would probably be needed is a clear move that catapults the XLM price toward the next important resistance level at around $0.13.

Should this succeed, the XLM bulls could target the next resistance zone around $0.23.

Stellar XLM USD

Bullish News Pushing Stellar Out Of The Bearish Trend?

A potential catalyst for a breakout out of the bearish trend was provided yesterday by the Stellar Foundation. It shared in a tweet that TASCOMBANK, one of Ukraine’s oldest commercial banks, published the results of its e-money pilot project on the Stellar network.

Remarkably, TASCOMBANK is one of the leading Ukrainian commercial banks, which is regarded as a system bank. It operates in many areas of banking, including consumer and corporate lending, factoring, e-commerce, and trade finance.

The report on the project, which was launched in December 2021, informs the National Bank of Ukraine and the Ministry of Digital Transformation about the benefits of issuing e-money on the Stellar blockchain, highlighting the advantages.

As stated in a Stellar Foundation blog post, TASCOMBANK praises the blockchain’s transparency, security, and confidentiality of customer data, low transaction costs, instant payment functionality, and high throughput “at each stage of development, from conducting operations to testing”

The goal of the project was to test the issuance of e-money, focusing on peer-to-peer and merchant payments, as well as payroll. Sergii Kholod, First Deputy Chairman of the Board of TASCOMBANK, commented:

As part of a pilot project we explored a new way of issuing and managing electronic money which could be a new generation means of payment for the citizens and organizations of Ukraine, their employees and clients, government institutions, and international organizations.

Speaking about the pilot project, Oleksii Shaban, Deputy Governor of the National Bank of Ukraine, said that there are “still many hypotheses” that need to be investigated in the pilot project. However, he expressed that the pilot results are an important basis for use at commercial and central banks.

Oleksandr Bornyakov, the Deputy Minister of Digital Transformation of Ukraine, also revealed that his ministry and TASCOMBANK are currently examining “the approaches to further rollout of blockchain-based payment instruments.”

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Can Russia Circumvent EU Sanctions Through Cryptocurrency?

Russia has seemingly turned to cryptocurrency since the West decided to ‘punish’ the nation for its invasion of Ukraine. A list of sanctions had been imposed upon the country by the United States and the EU which worked to essentially cut Russia off from world traders. However, with the rise in popularity of crypto, it has provided a possible way for the country to evade these sanctions which would have otherwise stuck when fiat currencies were the only form of payment.

Why Russia Could Turn To Cryptocurrency

One thing that has drawn investors to cryptocurrencies such as Bitcoin is the fact that they are decentralized. A decentralized currency is not controlled by an entity. Hence, sanctions do not apply to them regardless of how severe they are. This has made it attractive to those who want to evade detection by governments, or in this case, countries trying to circumvent sanctions.

Lately, Russia has been warming up to crypto as a way to foster trade around the sanctions. The most prominent of these have been the sanctions on Russian gas purchases, which breeds the possibility of the country accepting crypto as a form of payment for their oil and gas. By using a cryptocurrency such as Bitcoin, Vladimir Putin could be able to completely evade these sanctions and the established banking system. 

Back in September, the US Treasury’s assistant secretary for Terrorist Financing and Financial Crimes, Elizabeth Rosenberg, told lawmakers that it was possible for the Kremlin to actually evade sanctions levied against it. Senator Elizabeth Warren also echoed this concern, pointing to the fact that there was already widespread use by North Korea to evade sanctions, and it was just as easy for Russia to do the same.

Crypto total market cap chart from TradingView.com

Market cap at $984 billion | Source: Crypto Total Market Cap on TradingView.com

Still An Important Player

Even though there are currently sanctions against Russia, the EU still relies heavily on the supply of oil and gas from the Kremlin. Companies in Europe, although they have shown support for Ukraine in the war, continue to quietly acquire products from Russia.

Given this, it is not a stretch to say that Russia would have an abundance of customers if it were to switch to crypto payments for its oil and gas. It is already an established player in the oil and gas industry and companies will not have an easy go of it having to change suppliers. So it would make sense to go through the relatively small inconvenience of converting fiat to crypto to pay Russia than spending millions of dollars to change international suppliers.

Russia is already softening its stance on cryptocurrencies since the war started. In September, it was reported that the government had reached an agreement with the central bank on a rule that would allow residents to carry out cross-border payments using crypto. Trade Minister Denis Manturov said back in May that the country would legalize digital asset payments “sooner or later.”

Featured image from PYMNTS, chart from TradingView.com

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