The US, Russia step up the crypto race

With mining officially legalized in Russia, the US is set to become the crypto capital of the world. What’s happening in the crypto arena between the two countries?

On August 8, Russian President Vladimir Putin signed a law allowing crypto mining to be legalized. With the exception of certain paragraphs, the document will enter into force on November 1. In addition, the president signed a law allowing foreign trade settlements and exchange trading in crypto as experimental legal regimes from September 1.

So what does this mean for the industry?

The emergence of the law will open the way for new major crypto players and the old ones will have the opportunity to legalize income by working officially. There is a lack of understanding of the specific conditions that miners face, creating certain turbulence.

However, the development of mining can positively affect the flow of investment into highly developed sectors of the Russian economy. Moreover, with the law on crypto mining, Russia officially joins the race of industry leaders.

US is closely monitoring Russia’s attempts to use cryptocurrencies

With the tightening of sanctions since 2022, Russian businesses have been experiencing serious problems with payments for foreign trade transactions. In this regard, the country has raised the issue of using digital currencies.

In 2023, Central Bank Governor Elvira Nabiullina allowed the use of cryptocurrency for foreign payments as an experiment. In March 2024, Putin signed a law on the use of digital financial assets.

According to Bloomberg, two major Russian metallurgical companies began using the Tether (USDT) stablecoin and several other cryptocurrencies in late May, mostly for payments with Chinese customers and suppliers:

Two years after the invasion of Ukraine began in February 2022, major Russian firms are now turning to blockchain, highlighting the lasting impact on the economy of international restrictions imposed in response to the war.

Commenting on the development of the digital asset sector in Russia, Treasury Secretary Janet Yellen said that the US is closely monitoring Russia’s attempts to make payments with cryptocurrencies, as traditional payment methods have become more complicated due to tightened sanctions by the West.

He stated that the US does not think that Russia is actively using cryptocurrencies, but with the increase of US sanctions, this has become a source of concern.

US tightens regulations, crypto community awaits Trump

The current administration of US President Joe Biden has been known for its intolerance towards the crypto industry until recently. Thus, during Biden’s presidency, the Securities and Exchange Commission implemented tough measures against crypto companies in the context of numerous lawsuits.

However, due to the growing importance of the crypto community and the upcoming US presidential elections, politicians have significantly changed their attitude towards crypto.

Presidential candidate Donald Trump has already realized this. Yet, in one of his speeches in March, he declared his full support for the crypto industry. Therefore, if Trump fulfills his election promises, the US could see a boom in digital assets if he wins.

How is the US joining the crypto race?

Trump has vowed to make the US the “crypto capital” of the world if he comes to power. He contrasted the Republican Party’s growing support for crypto with the “tough approach” to regulation that he said is typical of the Biden administration.

“If Bitcoin is going to go to the Moon – as we say – it’s going to go to the Moon, I want America to be the leading country in that path.”

The politician also vowed to foil Biden and Vice President Kamala Harris’ anti-crypto crusade and fire the SEC chairman on “the first day” of taking office.

Trump’s speech was a 180-degree turn after he publicly criticized Bitcoin (BTC) during his presidency. In 2019, he said he was not a fan of Bitcoin and other cryptocurrencies, calling BTC a scam. He explained his hostility towards the cryptocurrency by stating that it competes with the dollar.

Russia and the US continue to compete in new areas

The beginning of the race between countries dates back to World War II, followed by the Cold War and the nuclear arms race.

Another rivalry between the US and Russia (then USSR) turned out to be in space. The first man in space was Soviet Yuri Gagarin. And the first man to walk on the Moon was American Neil Armstrong.

In the 1990s, Russia became the successor to the USSR, and the rivalry between the two countries continued, especially in the arms field.

With the development of the crypto industry, another area of ​​conflict emerges between the US and Russia, but both countries are still on the path to becoming crypto-friendly jurisdictions.

1960s: USA and USSR – Space race to see who will be the first to reach the Moon.

2020s: US vs Russia – the crypto race to see who will win #Bitcoin first to the moon.

Like ISRO and Chandrayaan in the space race, India also has the opportunity to overcome current challenges, innovate and become a world leader… picture.twitter.com/JkRlAhdv2Z

— Sumit Gupta (CoinDCX) (@smtgpt) July 30, 2024

In the US, crypto is recognized as a legal and freely convertible currency. Companies that provide bitcoin exchange services or perform crypto transactions are also in the legal field. However, they are still under pressure due to unclear regulations.

In Russia, despite the fact that Russians are active users of crypto, mining and digital assets, these were not legalized until recently. There is a law in Russia that allows crypto to be interpreted as a type of digital currency, prohibiting its use in Russia to pay for goods and services, but allowing it to be used as an investment object.

Who will win?

The United States and Russia are showing increasing interest in cryptocurrencies for different reasons. If in America the authorities’ interest is fueled by the upcoming elections and the struggle for votes, in Russia cryptocurrency is becoming an even more necessary tool against the backdrop of sanctions and the search for budget replenishment opportunities.

One way or another, both countries need to achieve a final victory in the crypto race: both the United States and Russia face the problem of insufficient regulation of this industry.