Just-In: Russia Set To Legalize Crypto, But There’s A Catch

The latest version of a proposed crypto bill in Russia shows that the country is gearing up to legalize crypto soon. But certain aspects of the bill, particularly its approach to using crypto as legal tender, raised some questions.

A major change in the bill is its approach to using crypto as legal tender. In its initial draft, released in February, the proposal said crypto would not be considered legal tender. The Finance Ministry appears to have softened this stance, albeit with some caveats.

Russia will allow some crypto as legal tender

According to a report by local news agency Kommersant, the new draft proposes that digital currency can be accepted as a “means of payment that is not the monetary unit of the Russian Federation.”

But the country will only allow decentralized tokens to be accepted. This likely means that USD-backed stablecoins like Tether (UST), will not be accepted as payment. According to Kommersant, it was not immediately clear what cryptocurrencies would be approved as tender by the government.

Other aspects of the bill have remained the same since its first draft. It outlines strict licensing requirements for crypto exchanges, and will also restrict the amount of crypto ordinary citizens can trade.

The country will also establish a register of all entities trading crypto within its borders, citizens and exchanges alike.

Crypto mining a major focus

As with trading, the bill also intends to set up a register of crypto mining businesses in the country. The bill will bring mining out of a legal gray area and under the government’s regulation, making the act susceptible to taxation.

The focus on mining comes amid calls by several Russian ministers to legalize the space, given Russia’s great potential to become a mining hub. Cheap electricity and a cold climate are the two biggest draws.

But given that Western countries have imposed crypto sanctions on Russia, it was unclear how the country would facilitate offshore crypto trade. Russian central bank member Ksenia Yudaeva also reportedly said that the bank saw limited options to use crypto to avoid sanctions.

Russia’s pivot into crypto comes in the wake of some of the strictest economic sanctions against Moscow, which have severely dented economic growth.