In a move that has sparked intense debate and speculation, Russia appears to be heading towards a comprehensive regulatory framework for cryptocurrencies.
While initial reports suggested a blanket ban on crypto circulation, recent statements from Russian lawmakers have shed light on a more nuanced approach.
TLDR
- Russia is not planning to completely ban cryptocurrency turnover in the country.
- Russia aims to prohibit the organization of crypto circulation, such as crypto exchanges and over-the-counter (OTC) services operating outside the Central Bank’s “experimental legal regime” (EPR).
- Exceptions will be made for crypto mining, mining pools, and Central Bank-supervised “test projects.”
- The proposed law aims to reinforce the Russian ruble’s dominance and control the crypto ecosystem within Russia.
- The “crypto ban” could come into effect as early as September 1, 2024, according to Russian lawmakers.
According to Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, Russia plans to prohibit the organization of cryptocurrency circulation within its borders.
This means that crypto exchanges and over-the-counter (OTC) services operating outside the Central Bank’s “experimental legal regime” (EPR) could face restrictions.
The rationale behind this move is twofold. Firstly, it aims to reinforce the dominance of the Russian ruble as the nation’s sole legal monetary unit.
Aksakov stated, “Cryptocurrency has become 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.”
Secondly, the proposed law seeks to protect Russian businesses from potential exposure to Western sanctions.
Anton Gorelkin, a deputy chairman of the State Duma Committee on Information Policy, emphasized that providing unrestricted access to the crypto sector could leave companies vulnerable to such sanctions due to “geopolitical realities.”
However, it is important to note that the proposed regulation does not constitute a complete ban on cryptocurrency turnover.
Russian citizens will still be able to use foreign crypto exchanges and OTC services, as they have done previously. Additionally, exceptions will be made for crypto mining activities, mining pools, and Central Bank-supervised “test projects.”
This approach reflects a compromise between the Central Bank’s push for stricter control over the crypto ecosystem and the recognition of the potential benefits of cryptocurrencies, particularly in the realm of international trade settlements.
According to data from Statista, Russian miners produce nearly $2.60 billion in liquidity for foreign trade settlements.
Artem Kiryanov, Deputy Chairman of the State Duma Committee on Economic Policy, underscored the importance of proper regulation, stating, “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.”
While the details of the proposed law are still being finalized, lawmakers have indicated that it could come into force as early as September 1, 2024.
The bill is expected to face minimal opposition in the State Duma, provided it has the full support of the Central Bank and government ministries.
It is worth noting that the impact of this “crypto ban” on the global cryptocurrency market is expected to be minimal, as Russia does not boast a significant mining population comparable to countries like China, which previously implemented a blanket ban on crypto and mining activities.
