Regulation
bne IntelliNews – Putin orders regulation of cryptocurrencies as country considers adopting currencies like Bitcoin for international trade
The Russian State Duma is set to deliberate on a bill to regulate digital currencies after President Vladimir Putin stressed the urgency of regulation for use both domestically and with other countries.
Speaking at a meeting on July 17, Putin stressed the need for Russia to “not miss the moment” with cryptocurrencies, and called on parliament to work on creating a “timely legal framework and regulation,” including on taxation and tariffs.
Since 2020, cryptocurrencies such as Bitcoin have been legal in Russia, but cannot be used to pay for goods and services. However, the question of whether more or less restrictions on their use are needed is a constant topic of discussion, especially given the increased difficulty of trade resulting from sanctions. In 2023, the Central Bank of Russia launched the digital ruble, a blockchain-based central bank digital currency (CBDC), but it has not been used for international trade.
“[Cryptocurrencies] “Dollars are not monetary units in the usual sense, but are increasingly used in the world as a means of payment in international transactions,” Putin told senior government figures, including Prime Minister Mikhail Mishustin and Finance Minister Anton Siluanov.
The bill, which is expected to be debated in parliament on July 23, would allow Russia to use cryptocurrencies for international trade payments. Tighter regulation of crypto payment systems in Russia could boost trade with major partners such as China and India, providing an alternative to traditional banking systems. Many banks, even in countries hostile to the US and the EU, are taking a cautious stance due to Western pressure and potential sanctions. This strategy mirrors Venezuela’s use of cryptocurrencies to circumvent restrictive economic measures.
However, despite their potential use as a way to circumvent Western sanctions, Putin’s push to regulate these cryptocurrencies is also driven by concerns about the energy-intensive process of mining cryptocurrencies. After China banned mining in 2021, Russia became the second-largest cryptocurrency mining country, after the United States.
“According to the Energy Ministry, Russia spends 16 billion kWh for these purposes annually, which is almost 1.5 percent of the country’s total electricity consumption. This figure continues to grow,” Putin said, stressing that Russia has relatively low electricity prices.
The president warned that the uncontrolled increase in electricity consumption for cryptocurrency mining could lead to power shortages in some regions. Regions such as Dagestan have already experienced power shortages.
“The problem is actually quite serious and has serious consequences for businesses, housing and communal services systems, as well as for some cities and towns,” Putin noted.
The bill proposed in the State Duma introduces regulations for cryptocurrency mining, giving the government the power to restrict mining activities in certain regions based on various factors.
Anton Gorelkin, deputy chairman of the State Duma Committee on Information Policy and co-author of the bill, clarified on Telegram that the document does not explicitly ban mining in certain regions of Russia. On the contrary, it provides the framework for imposing such restrictions if necessary.
“The government will have the right to impose a ban, taking into account many factors beyond just economic ones,” he wrote, stressing that the bill is designed to combat the grey and black segments of the mining market.
“The cryptocurrency industry could become one of our main export products and is essential to the competitiveness of our country.”