Bitcoin
Russia considers legalizing cryptocurrencies as a form of payment amid sanctions
Illustrative image of two commemorative bitcoins seen in front of the Russian national flag displayed on a computer screen.
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Russia is considering legalizing the use of cryptocurrencies for international payments as the country faces continued financial pressure due to Western sanctions.
The State Duma, the lower house of Russia’s parliament, will consider on Tuesday a law allowing international payments to be made using cryptocurrencies, Elvira Nabiullina, governor of Russia’s central bank, said on Tuesday.
“Today, the State Duma is considering a law allowing settlements in cryptocurrencies within the framework of an experimental regime,” Nabiullina said, speaking in the Russian Federation Council, the upper house of the Russian parliament, according to state news agency RIA Novosti.
The Duma is expected to approve the law on Tuesday, Reuters reported separately.
Russia’s central bank is also looking to move money across borders using cryptocurrencies, with its head saying crypto-based payments will happen before the end of 2024.
“We are already discussing the terms of the experiment with ministries and departments, with companies, and we hope that the first payments will take place before the end of this year,” she said.
The Russian Embassy in London was not immediately available to comment on the country’s plans to adopt pro-crypto legislation when contacted by CNBC on Tuesday.
The central bank’s commitment to using cryptocurrencies as an international payment method marks a reversal of the regulator’s previous stance on the technology.
In January 2022, the Russian central bank proposed to ban the use of cryptocurrencies for transactionsas well as digital currency mining, citing threats to financial stability, citizen well-being and monetary policy sovereignty.
This comes at a time when rising tensions between Russia and the US and its allies have led to numerous sanctions against individuals and entities in Russia in retaliation for the attack on Ukraine.
The US, the European Union and Britain are among the jurisdictions that have imposed sanctions on Russia following its invasion of Ukraine in February 2022. They have continued to increase pressure on the country, targeting President Vladimir Putin, Russia’s financial sector and numerous oligarchs.
Separately, Russia is also exploring the implementation of a digital version of the ruble.
Central bank digital currencies, or CBDCs, are different from cryptocurrencies. Unlike bitcoin and other cryptocurrencies, which do not have a central authority governing them, CBDCs are issued directly by a government and are designed to replicate fiat currencies in the form of a digital token.
Central Bank Governor Nabiullina said on Tuesday that the regulator will seek to move from a pilot phase to a mass implementation of the digital ruble from July 2025, Russian news agency Interfax reported.
Other sanctioned countries often try to circumvent these financial restrictions through the use of cryptocurrencies.
North Korea has been accused on numerous occasions of raising millions of dollars in cryptocurrencies to help fund various state programs and evade foreign sanctions.
The North Korean state-backed hacking group Lazarus was behind a major heist in Ronin Network — a blockchain that powers a popular non-fungible token (NFT) game called Axie Infinity. The hack resulted in cybercriminals making off with more than $600 million worth of digital tokens, blockchain analytics firms Elliptic and Chainalysis previously said.
Cryptocurrency advocates, on the other hand, also argue that digital assets are a useful tool for combating illicit activity. This is because the networks that support them, called blockchains, are public and show a historical record of transactions that is cryptographically secure and cannot be altered.