Russian Deputy Finance Minister Alexei Moiseyev announced that Russia would not ban cryptocurrencies, thus taking a different approach from its authoritarian partner China.
Russia takes a different stance on cryptocurrencies
Much has been made of China “banning Bitcoin” repeatedly in the last years. The recurring negative news coming from China morphed into a meme in the cryptocurrency space of social media, with some users even counting how many times China had “banned Bitcoin” and how the price had developed after that (always upwards). With China leading the pack of authoritarian countries making a stand against Bitcoin, one could have expected Russia to do the same. However, that was not the case.
Although the country still has a ban on cryptocurrency payments codified into law, it does not plan to ban them outright. Russian Deputy Finance Minister Alexei Moiseyev stated in an interview that the country would still prohibit the use of crypto for payments in order to control the flow of money within its borders. However, he announced that authorities would not prohibit trading crypto assets as part of foreign exchange transactions.
“A Russian citizen can have a wallet open outside the Russian Federation, but it is operations within the Russian Federation that they will be subject to bans, I think, for the entire foreseeable future, due to the fact that this is financial sovereignty.”
Only last July, the country released a notice, ordering its stock exchanges not to list investment products “related to cryptocurrency prices.” Furthermore, Russian authorities would work on legislative amendments to law enforcement agencies’ confiscation of illegal digital assets.
Russia seems to be following a mixed approach of carrot and stick. Unlike China, it doesn’t want to ban cryptocurrencies completely but is still clipping the tails of circulating Bitcoin freely. Also, Anatoly Aksakov, chairman of the Financial Markets Committee of the Russian State Duma, noted that Russia is actively pursuing a CBDC (central bank digital currency). According to Aksakov, a digital Ruble may become a reality by 2024.
What else is Russia planning?
As in other policy areas, Russia seems unwilling to show her hand completely. While President Putin remarked that it was “a bit early” to use cryptocurrencies to settle oil trades, he also acknowledged Bitcoin’s right to exist, essentially stating that crypto was here to stay. Moreover, Russia continues to push for de-dollarization, which would explain the country’s hesitancy to denounce Bitcoin completely. Its Ministry of Foreign Affairs has repeatedly declared that de-dollarization of the country’s currency reserves was one of its main priorities and declared that adding crypto into the mix may be an option:
“It’s possible to replace the U.S. dollar with other currencies, both national and regional, as well as some digital assets in the long term.”
Although one should not expect Russia to start buying Bitcoin tomorrow, it’s worth noting that an increasing number of state actors see the digital currency as a legitimate asset that merits consideration. The road to Bitcoin as reserve currency is still long, but it may be opening up bit by bit.
