The Russian central bank plans to facilitate international cryptocurrency payments by the end of the year to navigate delays caused by sanctions. According to a Bloomberg report, Russia is set to legalize the use of cryptocurrencies for payments to ease the growing difficulties faced by companies making foreign transactions due to U.S. sanctions over the war in Ukraine.
New Bill and Legislation Details
On Tuesday, lawmakers in the State Duma, Russia’s lower house of parliament, will review a cryptocurrency bill in its second and third readings. Additionally, separate legislation concerning crypto mining will also be discussed. Anatoly Aksakov, head of the Duma’s financial market committee, anticipates these draft laws to quickly pass through the Federation Council before being signed into law by President Vladimir Putin, taking effect on September 1.
“Previously, there were concerns that legalizing cryptocurrency could hinder the domestic market’s development,” Aksakov stated. However, he stressed that the potential of cryptocurrencies to help Russia bypass Western sanctions has become “an objective phenomenon and cannot be ignored” by regulation.
Legislative Framework
The new legislation will regulate cryptocurrencies similarly to foreign currencies. Aksakov noted that businesses involved in crypto and mining have pushed for the law to ensure they can operate legally without fear of investigation. The urgency to pass the law stems from hopes that cryptocurrencies will aid in cross-border transfers, according to digital asset analyst Ani Aslanyan. However, Aslanyan warned that the U.S. is likely to closely monitor Russian services and companies, leading to an ongoing effort to evade sanctions.
The regulations are expected to benefit large exporters, creating a “closed club” that excludes small and medium-sized enterprises. Transactions will be limited to entities that mine crypto themselves, a capability mainly held by major companies in Russia. The Bank of Russia will be the primary regulator of cryptocurrency, with additional oversight from the Federal Financial Monitoring Service, the Federal Tax Service, the Federal Security Service, and the Federal Property Management Agency. Once the regulations are in place, Aksakov believes “business can act boldly.”
Change in Russia’s Crypto Policy
This legislative push marks a shift in Russia’s stance on digital currencies. As Russian businesses struggle with payment issues due to U.S. sanctions, President Putin has urged for the regulation of these instruments for both domestic and international use. “Cryptocurrencies are increasingly used globally as a means of payment in international settlements,” he noted.
Previously, the central bank had proposed banning cryptocurrencies due to financial stability concerns. However, it has since supported their experimental use in cross-border transactions. First Deputy Governor Vladimir Chistyukhin has also highlighted the need to explore all options for addressing international payment challenges, even those previously considered unpopular.
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