Russia to legalise cryptocurrency in attempts to circumvent sanctions

The Russian Federation's new cryptocurrency legislation is slated to take effect on 1 September.

Source: Bloomberg

Details: Russia intends to legalise cryptocurrencies as businesses face increasing difficulty in making foreign payments due to the prospect of secondary penalties.

Last Monday, the State Duma approved a bill to legalise cryptocurrency mining in its first reading. On 30 July, deputies will continue to debate this bill and another one on cryptocurrency.

The measures are likely to be rapidly approved by senators in the Federation Council, followed by Vladimir Putin's signature and entry into force on 1 September.

According to reports, cryptocurrency can help Russia dodge Western sanctions.

While the use of digital money for payment is officially prohibited in Russia, Putin urged the government this month "not to miss the moment" in regulating the mechanism both locally and internationally.

He informed regulators that cryptocurrencies "are increasingly used in the world as a means of payment in international settlements".

The law on digital financial assets and digital currency went into effect in Russia on 1 January 2021, and permits cryptocurrencies to be treated as a form of digital money. It restricts its usage in Russia to pay for goods and services, but it can be used as means of investment.

In January 2022, the Russian Federation's Central Bank suggested banning the usage and creation of cryptocurrencies, alleging that they pose a severe threat to financial stability and economic security.

Background: 

• The Russian Duma may pass legislation regulating cryptocurrency mining in Russia by the end of this week.
• New businesses and residential areas will experience power outages if cryptocurrency mining farms consume the system's free capacity.
• Banks in countries that trade with Russia are increasingly delaying or interrupting payments for fear of secondary sanctions.

Support UP or become our patron!