Regulation
bne IntelliNews – Putin Orders Cryptocurrency Regulation as Country Mulls Adopting Currencies Like Bitcoin for International Trade
The Russian State Duma is set to deliberate on a bill to regulate digital currencies after President Vladimir Putin stressed the urgency of regulating their use both domestically and with other countries.
Speaking at a July 17 meeting, Putin stressed the need for Russia to “not miss the moment” with cryptocurrencies and called on parliament to work to create “a legal framework and regulation in a timely manner,” including taxation and tariffs.
Since 2020, cryptocurrencies such as Bitcoin have been legal in Russia, but they cannot be used to pay for goods and services. However, whether there should be more or less restrictions on their use has been a constant topic of discussion, especially given the increasing difficulty of trade due to sanctions. In 2023, the Central Bank of Russia launched the digital ruble, a central bank digital currency (CBDC) based on blockchain, but this has not been used for international trade.
“[Cryptocurrencies] “They are not monetary units in the usual sense of the word, but they are increasingly used around the world as a means of payment in international transactions,” Putin told a group of senior government officials, including Prime Minister Mikhail Mishustin and Finance Minister Anton Siluanov.
Upcoming legislation, scheduled for parliamentary debate on July 23, would allow Russia to use cryptocurrencies for international trade payments. Tighter regulation of cryptocurrency payment systems in Russia could boost trade with key partners such as China and India by offering an alternative to traditional banking systems. Many banks, even in countries hostile to the U.S. and EU, are taking a cautious stance due to Western pressure and potential sanctions. This strategy mirrors Venezuela’s use of cryptocurrencies to circumvent restrictive economic measures.
However, despite their potential use as a means of circumventing Western sanctions, Putin’s desire for regulation is also driven by concerns about the energy-intensive process of cryptocurrency mining. After China banned mining in 2021, Russia became the second-largest cryptocurrency mining country, after the United States.
“According to the Ministry of Energy, Russia annually spends 16 billion kWh for these purposes, which is almost 1.5 percent of the country’s total electricity consumption. The number continues to grow,” Putin explained, noting that Russia has relatively low electricity prices.
The President warned that uncontrolled growth in electricity consumption for cryptocurrency mining could lead to power shortages in some regions. Areas such as Dagestan have already experienced electricity shortages.
“The issue is, in fact, quite acute and fraught with serious consequences for businesses, housing and communal services systems, and for some cities and towns,” Putin noted.
The bill proposed in the State Duma introduces regulation for cryptocurrency mining, giving the government the authority to limit mining activities in certain regions based on various factors.
Anton Gorelkin, deputy chairman of the State Duma’s information policy committee and co-author of the bill, clarified on Telegram that the document does not explicitly ban mining in specific regions of Russia. Instead, it provides a framework for imposing such restrictions if necessary.
“The government will be given the right to enforce a ban, considering many factors beyond economic ones,” he wrote, noting that the bill is designed to combat the gray and black segments of the mining market.
“The cryptocurrency sector could become one of our main exports and is fundamental for the competitiveness of our country.”