According to a Bloomberg Report, Russia will soon legalize the use of cryptocurrencies for payments.
This move is aimed at easing the growing difficulties faced by companies in making foreign payments due to U.S. sanctions over the war in Ukraine.
Details on the New Bill and Legislation
On Tuesday, Lawmakers in the State Duma, Russia’s lower house of parliament, will deliberate on a cryptocurrency bill in its second and third readings. Additionally, separate legislation regulating crypto mining will also be considered.
According to Anatoly Aksakov, head of the Duma’s financial market committee, these draft laws are expected to quickly pass through the Federation Council before being signed into law by President Vladimir Putin, with an effective date of September 1.
“Previously, there were fears that the legalization of cryptocurrency could create problems for the development of the domestic market,” Aksakov said. However, he added that cryptocurrencies’ potential to help Russia bypass Western sanctions has become “an objective phenomenon and cannot be ignored” by regulation.
Under the new legislation, cryptocurrencies will be regulated like foreign currencies. Aksakov noted that businesses involved in crypto and mining pushed for the law to ensure they can operate legally without fear of investigation.
The urgency to pass the law comes from hopes that cryptocurrencies will help in cross-border transfers, according to digital asset analyst Ani Aslanyan. However, Aslanyan warned that the U.S. will likely monitor Russian services and companies, creating a cat-and-mouse game to evade sanctions.
The regulations will likely benefit large exporters, creating a “closed club” that excludes small and medium-sized enterprises. Transactions will be limited to entities that mine crypto themselves, a capability mainly held by major companies in Russia.
The Bank of Russia will be the primary regulator of cryptocurrency, with additional oversight by the Federal Financial Monitoring Service, the Federal Tax Service, the Federal Security Service, and the Federal Property Management Agency. Once the regulations are in place, Aksakov believes “business can act boldly.”
Shift in Russia’s Crypto Stance
This legislative push marks a change in Russia’s stance on digital currencies. As Russian businesses struggle with payment issues due to U.S. sanctions, President Putin has urged regulation of these instruments for both domestic and international use. “Cryptocurrencies are increasingly used in the world as a means of payment in international settlements,” he noted.
Previously, the central bank had proposed banning cryptocurrencies due to financial stability concerns. However, it has since supported their experimental use in cross-border transactions.
First Deputy Governor Vladimir Chistyukhin has also highlighted the need to explore all options for addressing international payment challenges, even those previously considered unpopular.