Russia's State Duma legalises cryptocurrency for sanctions circumvention

Russia's State Duma (the lower chamber of parliament) has passed a law legalising cryptocurrency mining in Russia in the second and third readings. Source: Meduza, a Latvia-based Russian media outlet, citing the website of the State Duma Details: The document stipulates that Russian legal entities and sole proprietors included in the relevant register will be authorised to mine cryptocurrency.

Individuals who do not exceed the government-set energy consumption limits will be allowed to mine cryptocurrency without being included in the register.

"We believe that the energy sector has an effective mechanism to exercise oversight of grey and black miners. Special limits will be established, allowing the sector to monitor activities and prosecute violators," said Anton Gorelkin, one of the authors of the amendments and Deputy Chairman of the Committee on Information Policy, Information Technology and Communications. Kremlin-aligned Russian news outlet RBC notes that the ban on organising cryptocurrency trading has been removed from the law, which could have led to the actual shutdown of Russian crypto exchanges.

The document retains the prohibition on advertising cryptocurrencies and various services based on their use.

According to Gorelkin, the authorities view cryptocurrencies "primarily as a tool for circumventing sanctions and a point of high-tech export". "Today, Russia ranks second in mining, and I am confident that once the regulation of this area is in place, we will come out on top, overtaking the US," the MP said. The State Duma also passed a law allowing the Bank of Russia to launch an experimental platform for using cryptocurrencies in international payments, effective 1 September.

Under current law, it is forbidden to use digital currency for payments in Russia. Background: Russia intends to legalise cryptocurrencies as businesses face increasing difficulty in making foreign payments due to the prospect of secondary penalties. The bills are expected to be signed by Russian leader Vladimir Putin and come into force on 1 September.

Cryptocurrencies could help Russia circumvent Western sanctions. While the use of digital money for payment is officially prohibited in Russia, Putin urged the government this month "not to miss the moment" in regulating the mechanism both locally and internationally. He informed regulators that cryptocurrencies "are increasingly used in the world as a means of payment in international settlements".

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