Russian parliament passes first reading of bills for crypto use in international trade, crypto mining

Russian parliament passed two crypto-related bills in the first of three readings. If passed, the laws would allow the use of crypto for international trade and officially recognize and regulate crypto mining.

One of the bills aims to facilitate international transactions that Western sanctions and regulatory pressures on local banks have hampered. The use of crypto would allow certain industries to bypass specific trade regulations. 

According to Reuters, Russia has experienced notable interruptions in global transactions with key trading partners like China, India, the United Arab Emirates, and Turkey. This is due to local banks exercising increased caution under pressure from Western regulators.

While crypto is not permitted for domestic payments in Russia, this new bill represents a significant shift in the country’s approach to digital currencies internationally. 

The proposed law aims to strengthen Russia’s trade relationships and challenge global regulatory dynamics. Other countries have already taken similar actions. For example, Venezuela has used crypto to bypass international sanctions, causing worry among U.S. lawmakers.

Russia looks to legalize crypto mining

The Russian parliament also passed the first reading of a bill to legalize cryptocurrency mining in Russia. Drafted by Deputy Anatoly Aksakov and others, the bill mandates government and Bank of Russia regulations for mining activities, with compliance monitored by a federal body. The initiative aims to legalize mining, ensure income declaration, and facilitate tax payments.

The bill also seeks to reduce legal risks by allowing the sale of mined digital currencies without using Russian information infrastructure and exempting these transactions from currency regulation laws. It includes a ban on cryptocurrency advertising and, if approved through a second and third reading, will take effect on September 1, 2024.

Impact on crypto and U.S. relations

The approval of this bill would place Russia in opposition to the United States’ longstanding efforts to curtail Moscow’s international trade capabilities. U.S. officials, including Treasury Secretary Janet Yellen, have closely monitored Russia’s use of crypto to evade sanctions. 

“We are very attentive to the [Russian] use of cryptocurrencies and stablecoins. We don’t think it’s a very substantial thing that Russia is doing but as our sanctions bite more and more, it becomes a concern,” Yellen said recently.

As sanctions tighten, Russia’s use of crypto could concern U.S. legislators trying to tighten their grip on the country’s international trade. 

President Vladimir Putin, while critical of bitcoin mining’s high energy consumption, supports using crypto to mitigate the impact of international sanctions. This legislative development underscores Russia’s determination to explore alternative financial mechanisms to sustain its international trade amidst ongoing economic pressures from the West.