The lower house of the Russian parliament, the State Duma, is set to review a cryptocurrency bill along with separate legislation on crypto mining in its second and third readings on Tuesday.
Anatoly Aksakov, head of the Duma’s financial market committee, told Bloomberg that the draft laws are expected to swiftly gain approval from senators in the Federation Council and be signed into law by President Vladimir Putin, with an effective date of September 1.
“Previously, there were fears that the legalization of cryptocurrency could create problems for the development of the domestic market,” Aksakov said.
“However, cryptocurrencies are an objective phenomenon and cannot be ignored.”
Russia to Regulate Crypto Amid US Sanctions
Russia’s move to regulate cryptocurrencies comes as the nation faces increasing pressure from US threats of secondary sanctions on foreign banks.
While the use of digital currency for payments is currently banned in Russia, President Putin recently urged the government to seize the opportunity to regulate this method domestically and for international transactions.
“Cryptocurrencies are increasingly used in the world as a means of payment in international settlements,” he said.
Russia is moving to regulate the use of cryptocurrencies, as companies wrestle with increasing difficulties in foreign payments under the threat of US sanctions https://t.co/z7IWKzzF5M
— Bloomberg Markets (@markets) July 30, 2024
The change in policy comes despite the central bank’s proposal for a blanket ban on cryptocurrencies in January 2022, citing risks to financial stability and economic security.
However, by the end of last year, the Bank of Russia softened its stance, supporting the experimental use of cryptocurrency and mining in cross-border settlements, although it advised financial organizations not to promote digital currency services publicly.
The Bank of Russia did not respond to requests for comments on this policy shift.
First Deputy Governor Vladimir Chistyukhin recently acknowledged the need to explore all options for overcoming challenges in international payments, including those previously considered unpopular.
According to Aksakov, the new legislation will regulate cryptocurrencies similarly to foreign currency in Russia.
Businesses involved in crypto and mining have lobbied for these laws to ensure they can operate within a legal framework without fear of official scrutiny.
More recently, it was revealed that the Russian government is reportedly set to make a crypto exchange ban u-turn, and will no longer try to stop the “circulation” of crypto in the country.
Russian Commodities Firms Turn to Stablecoins for Transactions
As reported, Russian commodities firms facing challenges in executing financial transactions with Chinese counterparts have turned to stablecoins.
In response to international restrictions and tightening compliance measures, these firms have turned to cryptocurrencies, including Tether’s stablecoin, to facilitate cross-border transactions with their Chinese clients and suppliers.
Furthermore, Russia has also been pushing forward with CBDC plans.
In July last year, Russian President Vladimir Putin officially signed a bill that would introduce a digital version of the country’s national currency.
The move gave legal authority to the Bank of Russia, the country’s central bank, to act as the platform operator for the digital ruble.
The digital ruble will act as a new form of payment, alongside cash and non-cash rubles.
More recently, it was revealed that Iran and Russia are working on CBDC and “digital financial asset” (DFA)-powered trade solutions.
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