Regulation
Russia Pushes Cryptocurrency, Mining Regulations as US Sanctions Impact Economy
Russia’s central bank plans to launch international cryptocurrency payments by the end of the year to overcome transaction delays caused by Western restrictions.
Russia is reportedly taking significant steps to regulate cryptocurrencies and cryptocurrency mining. The State Duma, the lower house of the Russian parliament, is set to review crucial legislation this week, according to a Bloomberg Report, July 30.
The move comes at a time when Russian companies are facing growing pressure from US sanctions, which have hampered international transactions.
Legislation on the horizon
The State Duma will hold the second and third readings of a bill on cryptocurrencies and separate legislation on crypto-mining.
Anatoly Aksakov, chairman of the Duma’s financial market committee, said the laws are expected to quickly gain approval from the Federation Council and be signed by President Vladimir Putin.
Aksakov explained that the new legislation would regulate cryptocurrencies similarly to foreign currency in Russia. This regulation is expected to bring clarity and stability to the use of digital assets in the country’s financial system.
The new rules are expected to come into force on September 1.
Tackling Sanctions Through Cryptocurrencies
Russian Central Bank Governor Elvira Nabiullina announced that the country plans to make its first international payments in cryptocurrencies by the end of the year.
This strategy aims to bypass the obstacles created by Western sanctions, which have delayed payments with major trading partners. The new law will allow Russian companies to use cryptocurrencies for international transactions, easing the burden on the economy.
The central bank stressed that delays in international payments have become a significant challenge.
Western regulators have put pressure on local banks, making them more cautious in dealing with Russian counterparties. This has complicated payments for a wide range of goods. The new legislation seeks to mitigate these problems by allowing the use of cryptocurrencies in cross-border transactions.
Regulatory flexibility
Nabiullina stressed the central bank’s readiness to show flexibility in implementing the new regulations. This includes discussing conditions with ministries, agencies and companies to ensure the successful execution of the first cryptocurrency payments by the end of the year.
Cryptocurrencies are currently not allowed for payments in Russia. However, the new law aims to change this situation. As recently as January 2022, the central bank proposed an absolute ban on cryptocurrencies, citing risks to financial stability and economic security.
However, late last year the bank softened its stance, supporting the experimental use of cryptocurrencies and mining in cross-border deals.
Stablecoins in use
Facing challenges in executing financial transactions with Chinese counterparties, Russian commodity companies have transformed to stablecoins, such as Tether. These cryptocurrencies facilitate cross-border transactions with Chinese customers and suppliers, offering an alternative amid increasingly stringent compliance measures.
In addition to regulating cryptocurrencies, Russia is moving forward with its plans for a Central Bank Digital Currency (CBDC). Last July, President Putin signed a law introducing a digital version of the country’s national currency.