Crypto mining in Russia
In the face of harsh economic sanctions, Russia is turning to cryptocurrencies. This is evident from its official’s recent call for crypto mining to be legalized as soon as possible. This, along with the decision to accept payment for oil and gas in bitcoin, represents a significant shift from the federation’s position on cryptocurrencies just a few months ago.
Central Bank on Cryptocurrency
According to a Reuters report from January 20th, the Russian central bank proposed a ban on crypto and crypto mining, citing threats to financial stability, citizens’ well-being, and the country’s monetary policy sovereignty. This came after the federation granted cryptocurrency legal status in 2020 but prohibited it from being used as a means of payment.
The federation’s stance on cryptocurrency appears to be eroding in recent times, as the federation sees it as a way out of the impact of harsh economic sanctions imposed by the United States and its allies.
Crypto as a solution to economic sanctions
A few days ago, Russian lawmakers proposed accepting Bitcoin as payment for oil and gas from friendly countries in order to offset the crippling economic consequences of the sanctions imposed on the federation.
According to Pavel Zavalny, chairman of the Russian Federation State Duma committee on energy,
“Moscow will sell raw materials to friendly states for yuan, lira, dinars, and even bitcoins, and to unfriendly states for rubles and gold, forcing them to either buy Russian currency or share their gold reserves with Moscow.”
He continued, saying:
“Gas will be the first step, then the Russian Federation will transfer all commodity trade with Western countries to the ruble. It makes no sense for Moscow to keep trading in euros and dollars, given that the West has blocked Russia’s settlements in these currencies.”
This policy is aimed at de-dollarizing the Russian economy and increasing its gold reserves. What is interesting about it is the addition of Bitcoin as a payment method for oil and gas, which could be interpreted as the federation’s possible transition to a digital economy.
Crypto Mining about to be legalized
According to Tass, a Russian news agency, Evgeny Grubchak, Russia’s Deputy Minister of Energy, has stated that the legal vacuum in the field of crypto mining must be eliminated
Grubchak said that:
“The legal vacuum makes it difficult to regulate this area and set clear rules of the game. This legal vacuum needs to be [eliminated] as soon as possible. If we want somehow to get along with this activity, and we have no other options in the current reality, we must introduce legal regulation, adding the concept of mining to the regulatory framework,”
This implies that the federation may be considering mining cryptocurrency with its energy reserves “in the current reality” of the harsh sanctions imposed on it. A move similar to Iran’s precedent, which has been a source of concern for the West since sanctions were imposed on the federation.
Grubchak went on to say that:
“It would be more efficient to determine sites for mining and to free energy capacities for miners at the regional level, and not at the federal level, and this needs to be regulated with regional development plans”
