- Russian legislators have re-introduced legislation to ban crypto.
- Certain exemptions to the proposed ban will apply.
- Authorities push the digital ruble instead of private cryptocurrencies.
Russia has a complicated relationship with cryptocurrency. While its central bank has floated a total crypto ban in the past, Russia is still the third largest Bitcoin mining country after the US and China, despite China’s crypto mining ban.
However, Russia’s significant share of Bitcoin’s hashing power did not stop legislators from reintroducing a previous proposal to ban the circulation of crypto in the country, sparking uncertainty for digital asset users.
Crypto Ban Incoming
According to local media, member of the State Duma Anatoly Aksakov re-introduced a proposal to ban the circulation of private cryptocurrencies starting September 1. However, the proposal will exclude crypto miners, mining pools, and central bank “trial projects,” suggesting a push toward the digital ruble.
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While the proposed bill has yet to pass through the lower house of parliament, Aksakov struck a decisive tone by stating that “the decision has been made.” Aksakov explained that a circulation ban is required as cryptocurrencies serve as a “quasi-currency,” but only the ruble can act as Russia’s currency.
The reintroduction of the proposal comes in the wake of a raid on the Beribit exchange at the end of March. Russian authorities alleged that the exchange had channeled funds connected to the Crocus City Hall terrorist attack, in which four gunmen killed 137 concertgoers.
Beribit users have since reported that their accounts have been frozen, and in-person demands for the return of crypto funds were met with chocolates and promises to reinstate accounts.
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With Russian crypto users facing massive uncertainty going forward, Aksakov was clear that the country’s digital asset ambitions lie purely with the digital ruble.
Digital Ruble Takes Precedent
Russia is moving forward with its digital ruble central bank digital currency (CBDC). The central bank recently revealed that the CBDC trials have yielded 25,000 transactions, of which 19,000 were between individuals.
Differentiating from others, the digital ruble features dynamic QR codes for merchant payments, online purchases, business-to-business transfers, and even basic smart contract capabilities.
The trials began in August 2023, involving 12 banks, 600 users, and 30 retailers in 11 cities. The Bank of Russia expects to roll out a final version of the digital ruble in 2025.
On the Flipside
- Banning crypto may lead to the creation of underground markets.
- Previous narratives indicated that Russia planned to use private cryptocurrencies like BTC to settle international trade as a dollar alternative post-sanctions.
- If a ban is enacted, Russian miners and mining pools would be forced to sell BTC to non-Russian entities.
Why This Matters
Aksakov’s plan signals Russia’s determination to maintain monetary control and sovereignty as digital assets proliferate globally. Aside from hindering crypto adoption and innovation within Russia, the situation spotlights the broader power struggle between decentralized and centralized money.
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