- Russia legalizes cryptocurrency mining and cross-border payments to counter-sanctions.
- New laws mark a shift from earlier bans, allowing businesses to trade using crypto.
- The Central Bank will regulate crypto transactions to ensure compliance with national interests.
Russia has approved new laws for the legal mining of cryptocurrencies and the use of cryptocurrencies in cross-border transactions. The bills were signed by President Vladimir Putin on August 8, indicating a significant shift in the country’s stance toward digital currencies. The new laws will be implemented in September for cross-border transactions and in November for the cryptocurrency mining activity. All these changes are meant to assist Russia to overcome the challenges of the western sanctions.
Earlier, the CBR had recommended that the use of cryptocurrencies should be completely prohibited. However, the new legislation shifts from this position by permitting the Russian businesses to engage in international transactions through cryptocurrencies. Approved entities will also be allowed to engage in mining of digital assets and this will deepen the integration of crypto in the Russian economy.
Russia Adopts Crypto to Cut Dollar Reliance
Russia’s interest in cryptocurrencies can be attributed to the need of the country to diversify its financial systems and minimize the dependency on the US dollar. Putin has called on the government to engage the potential that can be derived from digital currencies. Some of the officials such as Anton Gorelkin and CBR Governor Elvira Nabiullina support this change in order to reduce the effects of sanctions.
Although the country has not yet allowed the use of cryptocurrencies for domestic transactions, Russia takes one of the leading positions in the world in terms of crypto adoption. The new laws are to repeal an existing law that restricted the usage of the popular digital currencies and to make the laws concerning the usage of the digital currencies well defined and clear.
The Central Bank of Russia will regulate the system that will enable some companies to make payments in cryptocurrencies. This is seen as a way for country to counter some of the effects of the international sanctions that have been placed on the country by the West. In this case, sanctions evasion on a grand scale through cryptocurrencies will be barely possible owing to the low liquidity of the markets. Though, small scale evasion may still be feasible.
New Regulations for Crypto Mining
The new law also provides regulation of operations related to the mining of virtual currency. The mining firms will have to obtain accreditation from the local government authorities. This regulation is a move that is expected to bring the operations of Russia’s crypto into line with its national interests. The move is also expected to have the positive impact on the economy since the conventional financial channels are still limited due to the sanctions.
The Russian regulation of cryptocurrencies is expected to receive more attention from foreign regulators. The Russian Federation will pay special attention to the further development of relations with such countries as China and Iran through cryptocurrency as the country seeks to overcome its reliance on the western financial systems.
