Russia to regulate cryptocurrencies amid sanctions pressure

Russia is set to regulate cryptocurrencies as it grapples with increasing difficulties in foreign payments due to US sanctions related to the Ukraine conflict.

The State Duma will review a cryptocurrency bill, including legislation on crypto mining, in the second and third readings on Tuesday. The draft laws are expected to quickly pass the Federation Council and be signed into law by President Vladimir Putin to take effect on September 1.

Anatoly Aksakov, head of the Duma’s financial market committee, noted that while cryptocurrencies might help Russia circumvent Western sanctions, their regulation is necessary.

This marks a significant shift from the central bank’s earlier stance, which proposed a blanket ban on cryptocurrencies in early 2022. The Bank of Russia now supports the use of cryptocurrencies and mining for cross-border transactions.

Putin has emphasised the importance of regulating cryptocurrencies to capitalise on their use in international payments. The new laws will treat crypto similarly to foreign currency in Russia, with oversight from multiple government agencies, including the Bank of Russia.

However, critics argue that the regulations may benefit only large exporters, potentially excluding smaller businesses. The new framework aims to stabilise and normalise cryptocurrency transactions amidst growing international scrutiny.

Attribution: Bloomberg.