Russia Moves to Legalize Crypto Use for International Payments—Here’s Why

According to the latest reports, Russia is now accelerating its regulatory efforts on crypto usage—a move that comes amidst increasing international sanctions, which are impacting business operations and financial transactions. This comes as Bloomberg reported earlier today that the Russian government is working on legislation that could make digital currencies a vital component in circumventing these financial barriers, highlighting a significant policy shift from earlier restrictions.

Details of The Crypto Legailzation

The State Duma, Russia’s lower house of parliament, is scheduled to process the crypto bills in its upcoming sessions. These include both the general regulation of digital currencies and specific measures concerning crypto mining. Furthermore, the draft laws, expected to quickly pass through the legislative process, are set to be enacted by President Vladimir Putin by September 1st.

Related Reading: Crypto As A Weapon? Russia Considers Stablecoins To Fight Sanctions

It is worth noting that this rapid advancement in digital currency legislation highlights a notable shift in Russia’s approach, moving from skepticism to tentative acceptance as a necessity driven by geopolitical pressures. In addition, the push towards embracing cryptocurrencies is particularly noteworthy as it follows heightened difficulties faced by Russian companies in executing international transactions due to extensive US sanctions linked to the ongoing conflict in Ukraine.

The Russian Central Bank had recently proposed a total ban on cryptocurrencies, citing risks to financial stability. However, recent global and domestic developments have necessitated a reevaluation of this stance.

Anatoly Aksakov, head of the Duma’s financial market committee, noted:

Previously, there were fears that the legalization of cryptocurrency could create problems for the development of the domestic market. While cryptocurrencies may help Russia to bypass Western sanctions, their use is “an objective phenomenon and cannot be ignored.”

Notably, the legislative shift is also seen as a response to President Putin’s urging for the country “not to miss the moment” to regulate and integrate digital financial activities within and beyond Russia, according to Bloomberg.

How would the Regulation be Handled?

Aksakov, speaking on how the crypto regulation will be handled, disclosed that digital currency transactions, once legalized, would receive a structured framework that aligns them with foreign currency regulations in Russia.

This would potentially open up new avenues for both large and small enterprises. Aksakov added:

Businesses involved in crypto and mining lobbied hard for the law to ensure they can work within normal legal frameworks and not fear official investigation.

The report further revealed that the immediate beneficiaries are likely to be major exporters capable of meeting the stringent conditions laid out in the new regulations.

Additionally, the Central Bank of Russia would play a role in overseeing these transitions, with other federal agencies also involved in monitoring and controlling the circulation of legalized digital currencies.

Featured image created with DALL-E, Chart from TradingView