Russia is considering turning to cryptocurrency as it looks for ways to strengthen its finances amid crippling Western sanctions imposed in response to President Vladimir Putin’s war in Ukraine.
The country’s lower house of parliament, the state Duma, is this week expected to consider a bill that would pave the way toward creating a domestic cryptocurrency market.
The legislation would legalize cryptocurrency mining and the sale of the cryptocurrency mined from January 1, 2023. Its authors include the chairman of the Duma Financial Markets Committee, Anatoly Aksakov, and deputy chairman of the Committee on Information Policy, Information Technologies and Communications, Anton Gorelkin.
“Digital currency obtained as a result of mining can be disposed of by the person who carried out the mining of this digital currency on the condition that Russian information infrastructure is not used in conducting transactions with it, with the exception of cases of transactions carried out in accordance with the established experimental legal regime,” the bill text states.
Aksakov told Russia’s daily broadsheet Izvestia that his committee had already considered the bill, and that it has so far received the support of the Ministry of Finance.
He said mining as a business has existed in Russia for a long time, but it lacks regulation.
“Large miners who have devoted their lives to this are now turning to us with a request to introduce their activities into the legal space so that they work normally, pay taxes and not feel fear of the structures that check them, including law enforcement agencies. Therefore, it is obvious that the law is very necessary,” Aksakov said.
The move comes as Russia’s financial woes are expected to worsen in 2023 amid sanctions imposed by the European Union, the US and other Western allies in response to Putin’s invasion of Ukraine on February 24.
Russia has been kicked out of the SWIFT global banking system, while Western nations have frozen Russia’s access to some of its foreign reserves. The US Treasury has also said it would restrict investors from buying Russia’s debt.
Russia lacks a diversified economy, a vibrant entrepreneurial class, the rule of law, and a stable business environment that can support a fast economic turnaround, according to the Wilson Center, a US-based think tank. Russia’s road to recovery has been made significantly more difficult by its anti-Western and isolationist rhetoric, the think tank said.
Aksakov was quoted by Reuters as telling a local news outlet that discussion of digital currencies is becoming more prominent in Russia.
“The topic of digital financial assets, the digital ruble and cryptocurrencies is currently intensifying in society, as Western countries are imposing sanctions and creating problems for bank transfers, including international settlements,” he said.
“If we launch this, then other countries will begin to actively use it going forward, and America’s control over the global financial system will effectively end,” Aksakov added.
Newsweek has contacted Russia’s foreign ministry for comment.
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