Russia is making a significant move by legalizing cryptocurrency payments amidst pressure from sanctions. This decision is expected to help companies facing difficulties with foreign payments due to U.S. sanctions related to the conflict in Ukraine.
The State Duma, Russia’s lower house of parliament, is set to discuss a cryptocurrency bill in its second and third readings. The bill, along with separate legislation on regulating crypto mining, is likely to pass quickly through the Federation Council and be signed into law by President Vladimir Putin, with an effective date of September 1.
Anatoly Aksakov, head of the Duma’s financial market committee, emphasized that the legalization of cryptocurrencies is necessary to address the challenges posed by Western sanctions. The new legislation will treat cryptocurrencies like foreign currencies, providing businesses involved in crypto and mining with legal clarity and security to operate without fear of investigation.
The primary goal of this move is to facilitate cross-border transfers, with hopes that cryptocurrencies will help Russia bypass sanctions. However, digital asset analyst Ani Aslanyan warned of potential monitoring by the U.S., leading to a game of evasion to avoid sanctions.
The regulations are expected to benefit large exporters, forming a “closed club” that excludes small and medium-sized enterprises. Transactions will be limited to entities capable of mining crypto, a capability mainly held by major companies in Russia.
The Bank of Russia will be the main regulator of cryptocurrency, with oversight from several other government agencies. Once the regulations are in place, businesses are encouraged to embrace cryptocurrency boldly.
This shift in Russia’s stance on digital currencies reflects President Putin’s call for regulation of cryptocurrencies for domestic and international use. While the central bank had previously proposed banning cryptocurrencies, it now supports their experimental use in cross-border transactions.
First Deputy Governor Vladimir Chistyukhin has stressed the importance of exploring all options to address international payment challenges, even those that were previously unpopular.
In conclusion, Russia’s decision to legalize cryptocurrency payments demonstrates a strategic response to economic pressures and a willingness to adapt to the changing financial landscape. This move is expected to have far-reaching implications for businesses and the overall economy in Russia.
