Russia Implements Crypto Ban to Reinforce Ruble Amidst Geopolitical Tensions
Russia has announced a prohibition on cryptocurrencies to bolster the ruble amidst escalating geopolitical tensions and sanctions. The ban, spearheaded by Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, seeks to tightly control the circulation of digital assets like Bitcoin, permitting only those issued within Russian jurisdiction. This move forms part of a broader governmental strategy aimed at managing the crypto landscape amid heightened international tensions.
Aksakov emphasized that the upcoming legislation intends to confine non-Russian crypto activities to support the dominance of the ruble, stating:
"Our legislation will permit digital financial assets issued within Russian jurisdiction, including digital rubles. The rationale behind the ban stems from the observation that cryptocurrencies currently serve as quasi-currencies replacing the ruble within the country. However, it is only the Russian ruble that truly serves the purpose of a monetary unit, hence this decision."
The proposed bill will include provisions for exceptions, allowing crypto miners and Central Bank-sponsored experimental projects within a controlled legal framework. This concession is crucial, given that crypto mining significantly contributes to Russia's tax revenues, generating over $2.59 billion in liquidity for foreign trade settlements, according to Statista.
However, there exists a lively internal discourse among Russian policymakers regarding this approach. Artem Kiryanov, Deputy Chairman of the State Duma Committee on Economic Policy, stressed the necessity of clear regulations:
"The regulation of cryptocurrency must be outlined in the digital code, providing a precise conceptual framework and consistent judicial enforcement practices."
In contrast, Russia's Finance Minister, Anton Siluanov, advocates for a more balanced approach, proposing regulations that facilitate the use of cryptocurrencies in both domestic and international transactions. Elvira Nabiullina, Head of the Bank of Russia, also supports experimenting with cryptocurrencies in international settlements.
Recent reports have highlighted the use of cryptocurrencies by Russian entities, particularly Tether's USDT, to procure essential components for military technology. In a notable case, Andrey Zverev, a Russian operative in China, utilized USDT in 2022 to circumvent traditional banking channels and acquire drone components vital for military operations in Ukraine, evading scrutiny from sanctions-sensitive financial institutions.