Russia is on the brink of legalizing cryptocurrencies for international settlements with the potential passage of a new bill today. The country’s economy has faced challenges with international transfers since the beginning of the conflict in Ukraine in January 2022. Sanctions imposed by Western financial institutions have made it increasingly difficult for Russian companies to conduct transactions, even with trading partners like China, India, or Turkey.
Anatoly Aksakov, the head of the Duma’s financial market committee, mentioned to Bloomberg that cryptocurrencies will be subject to the same regulations as foreign currencies such as the U.S. dollar in Russia under the new bill. If approved by President Vladimir Putin and senators in the State Duma, the bill will become effective starting September 1.
The country has adopted a fluctuating stance on cryptocurrency for international settlements since the onset of the conflict. Initially placing a ban on crypto for payments, Russia later permitted financial services firms to experiment with cryptocurrencies for specific use cases.
Several heavily sanctioned nations, including Venezuela, have already incorporated cryptocurrencies into their international settlements. Russian crypto analyst Ani Aslanyan anticipates that crypto participation will primarily be limited to large and mid-size companies due to the complexities of meeting the requirements outlined in the new legislation.
Numerous firms have faced penalties for assisting Russian banks in utilizing cryptocurrencies. Lithuania recently fined crypto firm Payeer 9.3 million Euros for violations related to sanctions targeting Russia, specifically allowing Russian customers to transfer funds to EU-sanctioned Russian banks.
If the new bill is passed, Aslanyan foresees heightened scrutiny of Russian crypto activities by countries like the U.S. Russian lawmakers acknowledge the necessity for innovative solutions to address Russia’s payment challenges. Elvira Nabiullina, the governor of the Russian central bank, has indicated the emergence of international payment systems excluding Western institutions in response to sanctions.
Additionally, lawmakers are preparing to vote on a bill concerning crypto mining. Russia, known for its cheap energy and conducive climate for mining in regions like Siberia, has historically been a leading nation in crypto mining. The country ranked third in the world in Bitcoin production in 2024 according to data provided by the Russian finance ministry.
Despite this, Putin has voiced concerns that unregulated crypto mining could lead to electricity shortages. The evolving crypto landscape in Russia presents both challenges and opportunities for the country’s economic future.
In conclusion, the potential legalization of cryptocurrencies for international settlements in Russia marks a significant shift in the nation’s financial landscape. As Russia navigates the complexities of integrating cryptocurrencies into its economy, the world watches closely to see how this decision will impact global financial markets and international relations.
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
