Russia Legalizes Bitcoin Mining and Cross-Border Crypto Trade Amid Sanctions

Russian lawmakers have passed a bill to legalize Bitcoin mining and the use of cryptocurrencies for international trade to counter economic sanctions. The new laws will take effect from November 1, 2024.

In a significant development, Russian lawmakers have passed a bill to legalize the use of Bitcoin (BTC) and other cryptocurrencies for international trade. This move comes as Russian companies face increasing difficulties in foreign payments due to Western sanctions over its invasion of Ukraine. Additionally, the lawmakers voted to fully legalize crypto mining in Russia starting from November 1, 2024.

The State Duma, Russia’s lower house of parliament, approved legislation allowing the use of cryptocurrency for global settlements. On Tuesday, legislators gave the initial approval to the new law, which permits businesses to use crypto for cross-border trade. “We are taking a historic decision in the financial sphere,” Anatoly Aksakov, the head of the Duma, told lawmakers, according to a Reuters report. Aksakov noted that while Russia had previously been hesitant about legalizing crypto, it now considers its use as “an objective phenomenon” requiring regulation.

Under the new law, global decentralized crypto assets will be regulated in the same manner as foreign currencies, such as the U.S. dollar, within Russia. The Bank of Russia will serve as the primary regulator for all crypto and digital asset matters. Although crypto trading and payments within Russia will remain banned, President Vladimir Putin has recently urged officials to regulate digital assets domestically and for foreign transactions. “Crypto is increasingly used in the world as a means of payment in international settlements,” Putin stated.

Reports indicate that the law is expected to take effect by September 1, with the first crypto transactions anticipated before the end of the year. Additionally, the Russian Duma passed a law legalizing crypto mining in the country from November 1, 2024. Registered entities and individual entrepreneurs with the Ministry of Digital Development will be allowed to engage in mining, while those not registered can only operate mining rigs if they do not exceed energy consumption limits, according to Ria Novosti.

Russia, which has affordable energy and cold weather suitable for mining in many regions, such as Siberia, has historically been one of the leading crypto-mining countries globally. It ranked third worldwide in 2024 for BTC mining, according to data provided by the Russian finance ministry to German news outlet bne Intellinews. Russia’s decision to legalize crypto comes as businesses in the country face mounting payment pressures from international sanctions. The United States, the European Union, and the U.K. are among the jurisdictions that imposed harsh economic sanctions on Russia after its February 2022 invasion of Ukraine.

The Russian Central Bank had previously called for a blanket ban on cryptocurrencies, citing risks to financial stability and monetary sovereignty. However, the growing need to circumvent foreign sanctions has forced the Bank of Russia to reevaluate its stance.

The journey to legalizing crypto in Russia has been lengthy and complex, involving multiple stakeholders and legal proceedings. These recent legislative changes signify a critical phase in Russia’s approach to cryptocurrency, reflecting a broader effort to restore confidence in the financial system under the constraints of international sanctions.

As the new laws take effect, the crypto community will closely watch Russia’s implementation and its implications for the global cryptocurrency market. This development underscores the potential for recovery and growth in the digital asset space when stakeholders collaborate to address complex issues.

In summary, Russia’s efforts to legalize Bitcoin mining and cross-border crypto trade represent a crucial step in adapting to the economic challenges posed by international sanctions. As the laws come into force, the focus will shift to ensuring that the industry continues to evolve with greater stability and trust.

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