In recent years, Russia has sent mixed signals regarding its policies on cryptocurrencies. However, it seems Russia has started to embrace them.
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 law allowing crypto transactions but prohibiting the use of crypto as a means of payment. Banks registered with the Bank of Russia can use such assets. Crypto transactions can be challenged in court only if ownership is asserted and transactions are declared.
In February 2022, the Russian central bank released a consultation paper mentioning Russia's leading role in mining and trading crypto. It stated the use of crypto for settlements as 'limited,' even in the long term. The paper proposed banning the creation of cryptocurrencies and exchanges, prohibiting financial institutions from investing in crypto or related assets, and banning mining. Additionally, the central bank urged the government to monitor Russian citizens' activity on foreign crypto platforms.
The reason behind the Crypto Thaw
Despite the central bank's recommendations, the Kremlin adopted a different approach. The main reason for this 'Crypto Thaw' was Russia's more favorable stance towards crypto due to Western sanctions narrowing the scope for international trade. Finance Minister Anton Siluanov acknowledged that Russian companies increasingly use Bitcoin for international trade, and Putin is not obstructing this process. However, using crypto as a payment method within the country and advertising crypto remains prohibited.
Bitcoin mining, dollar undermining
Crypto is famous for its independence from governments, but that's not the only reason why the Russian government resorted to using this asset. For years, Putin has been an advocate for de-dollarization, and cryptocurrencies have become a fitting tool. Mining offers an opportunity to undermine the dollar's position. Companies associated with oligarch Oleg Deripaska, including BitRiver, engage in crypto mining. In 2022, BitRiver was sanctioned by the U.S. Treasury, highlighting cryptocurrencies' role in Russia's geopolitical strategy.
Has a Crypto Thaw come to Russia? It seems so. But the thaw is far from being summer or spring; it's a short defrosting period, opening new opportunities. Time will tell what comes next.
