WARSAW — Beginning in September, Russia’s central bank will be able to settle international transactions in cryptocurrencies and organize a formal exchange market for them. From November, the mining of Russian cryptocurrencies will be regulated. These are the results of new laws signed by Russian President Vladimir Putin.
On the eve of the war against Ukraine, the Central Bank of Russia wanted to force crypto out of the country’s financial system, resulting in bans on almost all transactions tied to their mining and trade in Russia.
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In July, however, Russia’s lower house of parliament, the Duma, quickly passed policies to legalize cryptocurrencies in Russia, albeit in a limited way, and to regulate their mining. This happened after the United States, in June, imposed sanctions on the Russian stock market, resulting in the suspension of exchange trading in both dollars and euros. Among other effects, this led to an inability to determine the main market exchange rate of the ruble compared to these two major Western currencies.
From this point forward, the Moscow stock exchange has mainly been handling Chinese yuan. But, in the past few days, the largest Russian bank, Sbierbank has not ruled out that the handling of yuan on the stock market will also be suspended due to the limited supply of Chinese currency in Russia.
As Russia remains isolated from the world economy as a result of hefty sanctions, cryptocurrencies may be able to help. This is the view of the analysts who commented on Moscow’s plans to legalize digital currencies. And their suspicions are confirmed by the new regulations approved by Putin.
Experiments with crypto
The first of the laws signed by Putin allows the central bank to conduct an experiment related to the creation of a platform for the use of cryptocurrency in international trade settlements and to conduct exchange trading in cryptocurrencies under the central bank’s control. This permit was issued under the Law on Creating Special Rules for Digital Regulations that are not subject to Russian law. This also includes regulations targeting money laundering, but also a ban on cryptocurrency settlements in Russia.
It would help to enable the exchange of rubles for a digital currency intended to pay the bill for exported goods.
According to the new measures, from Sept. 1, the central bank will be able to settle the import and export transactions of Russian investors in crypto, and to organize a market for digital currencies. Moreover, the central bank will be able to appoint a settlement operator in digital currencies as part of the operating payment system. In practice, this would help to enable, for example, the exchange of rubles for a digital currency intended to pay the bill for exported goods.
The first settlements of export and import transactions in cryptocurrency are to be carried out by the end of the year, Russian central bank Governor Elvira Nabiullina announced last month.
How to mine the “Bitruble”
The next law signed by Putin introduces policies pertaining to the mining of cryptocurrencies on Russian soil. Until now, this was not formally banned, but was unregulated. It was only forbidden to make settlements in Russia with cryptocurrencies, including those created in this country or by Russian entities.
From Nov. 1, cryptocurrencies mined in Russia will be exempt from this ban. But owners will not be able to offer them to an unlimited circle of people, offer goods and services related to digital money trading, or advertising a business. This suggests that the cryptocurrency mined in Russia will be sold mainly through the exchange organized by the central bank. Only on this exchange it will be possible to trade foreign cryptocurrencies approved by the central bank.
Putin claimed that uncontrolled cryptocurrency mining could lead to energy crises in specific regions.
Companies interested in cryptocurrency mining in Russia will be required to register such activities with the Ministry of Digital Affairs. Natural persons will be exempt from this obligation. But their activities are limited by the limit of energy that can be used to mine digital money. They will also be obliged to inform the financial supervision authority about their identification addresses and the amount of cryptocurrency obtained.
Companies and individuals engaged in cryptocurrency mining will not be able to combine this activity with the production and trading of electricity. Russian authorities may also ban cryptocurrency mining in specific regions of the country. In July, Putin claimed that uncontrolled cryptocurrency mining could lead to energy crises in selected regions of Russia. This indicates that such activity is being carried out in Russia on a large scale, and now Moscow intends to take it firmly under control.
