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Russia’s Changing Stance on Cryptocurrencies: A Shift in Policy
Russia has historically maintained an ambiguous stance on cryptocurrencies. However, recent developments suggest that the Kremlin is embracing crypto, albeit cautiously. This shift in policy raises questions about the motivations behind this change and the implications for the global cryptocurrency market.
Early Crypto Regulations in Russia
Until the 2020s, cryptocurrency in Russia existed in a gray zone. In July 2020, President Vladimir Putin signed a digital finance asset (DFA) regulation, allowing crypto transactions while prohibiting residents from using crypto as a means of payment. This regulation permitted banks registered with the Russian central bank to use DFAs, and challenging crypto transactions in court was possible only if crypto possession was maintained and the owner declared the transactions.
In February 2022, the Russian central bank released a consultation paper, “Cryptocurrencies: Trends, Risks, and Regulation.” The paper highlighted Russia’s leading role in mining capacity and the fact that Russians actively trade crypto. However, it also called the potential for the use of crypto for settlements “limited,” even in the long run.
The Reason Behind the Crypto Thaw
The 2022 consultation paper did not shape modern-day Russia’s relationships with cryptocurrency. Despite the recommendations from the central bank, the Kremlin took a more favorable approach towards crypto. The surface reason for this “Crypto Thaw” is the need to bypass Western sanctions, which narrowed the space for overseas trade.
Finance Minister Anton Siluanov admitted that Russian companies increasingly use Bitcoin for international trade, and President Putin is not hindering this process. In fact, Putin signed legislation that legalized the limited use of crypto for international trade in the summer of 2024.
However, the need for sanctions bypass is not the only reason for the friendlier approach to crypto. Another possible reason is the desire to undermine the US dollar’s dominance in global trade.
Bitcoin Mining, Dollar Undermining
Cryptocurrency is known for its independence from governments. However, the Russian government has resorted to using this asset to bypass sanctions and undermine the US dollar. President Putin has been a consistent proponent of de-dollarization, and cryptocurrencies have become a means to achieve this goal.
Some experts warn that making Bitcoin stronger in the US could come at the expense of the US dollar’s power. As a result, foreign trade made via Bitcoin instead of the US dollar could harm the dollar more than the ruble.
Support for Sanctioned Tycoons
Another possible reason for the government’s support of cryptocurrency is the need to support sanctioned tycoons, such as Oleg Deripaska. His aluminum factory, Rusal’s facility, was turned into a mining farm in 2019, and he has ties to other crypto mining companies, including BitRiver.
BitRiver was sanctioned by the US Treasury in 2022, but the company’s CEO, Igor Runets, denied any ties to the Kremlin. However, Bloomberg points out that Deripaska played a notable role in founding BitRiver and providing the facility for mining equipment.
Final Thoughts
Russia’s shift in policy towards cryptocurrency is a significant development in the global cryptocurrency market. While the “Crypto Thaw” is a positive sign, it is essential to note that this shift is not a guarantee of long-term support for cryptocurrency. The motivations behind this change are complex, and the implications are still unfolding.
For more news and updates on the cryptocurrency market, visit Global Crypto News.
