Russia is preparing to enforce a total ban on the circulation of crypto assets like Bitcoin as it looks to reinforce the ruble amid rising geopolitical tensions and crippling sanctions.
Instead, Russia will allow only digital financial assets issued within its jurisdiction.
Russia Looks To Enforce Crypto Ban
Anatoly Aksakov, the Chairman of the State Duma Committee on the Financial Market, is leading the initiative. The committee is part of a larger effort by the Russian government to control the crypto ecosystem as geopolitical tensions in the region escalate. According to Aksakov, the legislation aims to restrict non-Russian crypto operations in an effort to shore up the ruble’s dominance.
“Digital financial assets issued in Russian jurisdiction and digital rubles will be allowed. The need for a ban is due to the fact that today, cryptocurrency – is a quasi-currency that replaces the ruble in the country. But only the Russian ruble fulfills the mission of the monetary unit, so this decision has been made.”
However, the bill has made exceptions for crypto miners and test projects sponsored by the Central Bank. This has been done within an experimental legal framework, as crypto mining has given Russia a significant boost via increased taxes. Data from Statista has shown that crypto miners produce over $2.59 billion in liquidity for foreign trade settlements in Russia.
Strong Internal Debate
However, Russian policymakers are debating the approach, with Artem Kiryanov, the Deputy Chairman of the State Duma Committee on Economic Policy, stressing the importance of precise regulations.
“The regulation of cryptocurrency should be prescribed in the digital code, which would clearly spell out the conceptual apparatus and common judicial law enforcement practice.”
However, Russia’s Finance Minister, Anton Siluanov, has called for a moderate approach, calling for regulations to facilitate the use of cryptocurrencies for domestic and international transactions. The head of the Bank of Russia, Elvira Nabiullina, has also come out in support of the experimental use of cryptocurrencies for international settlements.
Reports have indicated that Russian entities have used cryptocurrencies, particularly USDT, to procure critical military technology. One notable example is that of Andrey Zverev, a Russian operative who used USDT to bypass traditional banking channels and purchase drone components vital for military operations in Ukraine.
Could Markets Crash After Russia Ban?
The cryptocurrency markets have seen their fair share of ups and downs. The Chinese ban on crypto and mining activities led to a market-wide drop. However, when the ban was announced, a significant chunk of all mining activity was located in China. The ban saw a mass exodus of miners from the country, adversely impacting the markets.
Russia on the other hand, does not boast of significant mining infrastructure. As a result, the impact of any ban would have minimal impact on the larger crypto markets. However, the crypto markets have faced a correction during the ongoing week, with Bitcoin registering a drop of over 6% in the past week.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
