Russia is ramping up its use of digital financial assets (DFAs), including Bitcoin, in international trade. Finance Minister Anton Siluanov confirmed this development on Dec. 25 in an interview with Russia-24, a state-owned news channel. He cited recent legislative changes that now allow the use of cryptocurrencies for foreign payments.
Bypassing Sanctions
Businesses in Russia are increasingly turning to Bitcoin and other cryptocurrencies for international trade. This is part of a broader effort to bypass Western sanctions and deal with the difficulties they face in conducting global commerce. Russia has had growing issues in trading with major partners like China as many banks are wary of transactions with Russian entities due to potential fallout from Western regulators.
Current and Future Plans
Siluanov revealed that such transactions using DFAs and Bitcoin are already underway and that the government intends to further expand their implementation. He emphasized that using DFAs instead of the U.S. dollar in foreign trade is practical and forward-looking, calling it a step towards modernizing global settlement systems. He stated that the experimental legal framework for DFAs, put in place in September 2024, permits these practices and said, “These activities will grow. By next year, it will be a reality.”
The Government’s Dual Stance on Crypto
Caution for Investments
Despite supporting the use of Bitcoin in trade, Siluanov has advised caution when it comes to cryptocurrency investments. Speaking at an educational event in November, when Bitcoin had surged past $76,000 and was nearing the $100,000 mark, he warned the public against seeing crypto as a source of quick profits. He said, “I don’t recommend cryptocurrency as a means of investment. There are safer ways to invest and achieve good returns.” This shows the government’s two-sided approach: backing its use in trade while urging care in personal investment decisions.
Russia’s Cryptocurrency Framework Developments
Legalization of Crypto Mining
Russia has made significant moves in its cryptocurrency framework this year to boost international trade. In August, the country legalized crypto mining, including Bitcoin.
Regional Mining Restrictions
However, Russia has also imposed regional mining restrictions. Starting from January 1, 2025, cryptocurrency mining will be banned in 10 regions such as Dagestan, Chechnya, and parts of Donetsk, Lugansk, Zaporizhia, and Kherson. These bans, which will be in effect until March 15, 2031, are aimed at addressing power issues related to subsidized energy in these areas. Elsewhere in the country, miners are required to report earnings to the Federal Tax Service and abide by energy regulations.
Domestic Payment Prohibition
While Russia recognized Bitcoin as a financial asset in 2021, its use as a domestic payment method remains prohibited.
Putin’s View on Dollar and Bitcoin
President Vladimir Putin has criticized the U.S. dollar’s dominance in global finance, accusing the U.S. of weaponizing its currency. He suggested that Bitcoin offers an alternative as it operates outside government control.
In conclusion, Russia is actively expanding its use of Bitcoin in foreign trade as a way to navigate around sanctions and modernize its trade settlement methods. At the same time, it has a balanced approach with regulations and restrictions in place regarding mining and domestic use, while also cautioning citizens about cryptocurrency investments. The coming months and years will show how these efforts play out and impact Russia’s position in the global trade and cryptocurrency landscapes.
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