A turnaround. While the Bank of Russia was pushing for a ban on cryptocurrency exchanges, the authorities decided otherwise. The country will try to regulate them so that Russian companies can use them and thus circumvent foreign sanctions.
Russia says regulating cryptocurrencies will help address Western financial sanctions
In early July, Russia was considering legalizing stablecoins to facilitate trade with BRICS+ countries. Ultimately, there is every reason to believe that Russian authorities are indeed seeking to regulate the sector, but in a broader manner.
Indeed, lawmakers in the State Duma, the lower house of the Russian parliament, are considering two bills on cryptocurrencies in second and third readings this Tuesday.
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Reluctant until recently, Russia has finally made a U-turn on their legalization, the bill to regulate cryptocurrencies under the same regime as that relating to foreign currencies.
Indeed, many Russian companies and financial institutions are targeted by Western economic sanctions due to the war in Ukraine. By allowing cryptocurrency payments for international transactions through this bill, Russian authorities hope to circumvent these financial restrictions..
In recent years, the Russian central bank has been adamant in advocating a ban on cryptocurrencies. However, faced with an increasingly tense geopolitical and economic context, it had no choice but to soften its stance.
Earlier this month, Central Bank Governor Elvira Nabiullina, officially announced its change of position regarding cryptocurrencies :
“New financial technologies create opportunities for systems that did not exist before. That is why we have softened our position on the use of cryptocurrencies in international payments, supporting their use in payments.”
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Russia allows cryptocurrency trading, but wants to maintain some control
After consideration by the State Duma, it will be the senators of the Federation Council who will take the time to approve these two draft laws.. If the opinion is favourable, President Vladimir Putin will promulgate them, ” for entry into force on September 1 “, according to Anatoly Aksakov, head of the Duma's financial markets committee.
While Russia may soon allow cryptocurrency trading and mining, authorities intend to maintain some control over transactions.
Thus, the Russian central bank will be designated as the main regulator of the sector. The Federal Financial Monitoring Service, the Federal Tax Service, the Federal Security Service and the Federal Property Management Agency will work together with the Bank of Russia to control cryptocurrency exchanges and mining.
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If adopted, these developments in cryptocurrency regulation will most likely have a positive impact on their adoption in Russia.
This will also be an opportunity for the country to regulate cryptocurrency mining, which represents 1.5% of Russian electricity consumption. Vladimir Putin had not hesitated to warn against Bitcoin mining in Russia, which, to his taste, draws too much of the country's electricity supply.
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Source : Bloomberg
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Surprised by the rise of crypto-assets in the late 2010s, I started to closely follow this sector that fascinates me to the highest degree. When I am not in football stadiums, rugby or handball halls, I work on writing relevant articles about cryptocurrencies and more broadly, Web3.
Zacharie Tazrout
4 articles
