Russia Moves to Legalize Cryptocurrency Payments Amid Sanctions Pressure: Report

According to a Bloomberg report, Russia will soon legalize the use of cryptocurrencies for payments.

The move is aimed at easing the growing difficulties companies face in making payments abroad due to US 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. In addition, 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 by President Vladimir Putin, with an effective date of September 1 .

“Previously, there was a fear that the legalization of cryptocurrency could create problems for the development of the domestic market,” Aksakov said. However, he added that the potential of cryptocurrencies to help Russia avoid Western sanctions has become “a targeted phenomenon and cannot be ignored” by regulation.

Under the new legislation, cryptocurrencies will be regulated as foreign currencies. Aksakov noted that companies involved in crypto and mining pushed the law to ensure they can operate legally without fear of investigation.

The urgency to pass the law stems from the hope that cryptocurrencies will aid in cross-border transfers, according to digital asset analyst Ani Aslanyan. However, Aslanyan warned that the US 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 companies. Transactions will be limited to entities that mine cryptocurrencies, a capability primarily held by major Russian companies.

The Bank of Russia will be the primary cryptocurrency regulator, with additional oversight by the Federal Financial Supervision Service, the Federal Tax Service, the Federal Security Service and the Federal Property Management Agency. Once regulations are in place, Aksakov believes “businesses can act boldly.”

Change in Russia’s Cryptographic Position

This legislative push marks a shift in Russia’s stance on digital currencies. As Russian companies struggle with payment problems due to US sanctions, President Putin has called for the regulation of these instruments for both domestic and international use. “Cryptocurrencies are increasingly being used around the world as a means of payment in international settlements,” he noted.

The central bank had previously proposed banning cryptocurrencies due to financial stability concerns. However, it has since supported its experimental use in cross-border transactions.

First Deputy Governor Vladimir Chistyukhin has also stressed the need to explore all options for addressing international payment challenges, even those previously considered unpopular.

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