Russia, one of the world’s leading nations, has moved to recognize Bitcoin as an official currency. This news comes after the Russian government met with the central bank to seek better status for the digital currency.
As reported by Kommersant, the government and the central bank agreed to regulate cryptocurrencies in Russia. An excerpt from the statement: “ The government has determined the future of digital currencies in Russia. The turnover of such financial assets will be regulated by the state with strict obligations for all participants in the professional market and an emphasis on protecting the rights of ordinary investors.”
Russia will Regulate Crypto Activities
Russia plans to release a draft law on the circulation of cryptocurrencies. According to the report, the law, which would go live on February 18th, would classify cryptocurrency as an “analog of currencies” rather than a digital financial asset. Therefore, from now on, the flow of cryptocurrencies in Russia would need verification from the bank or any peer-to-peer exchange licensed in the country.
BREAKING: The Russian government and central bank have just reached an agreement on cryptocurrencies, according to Russia's Kommersant.
Both organizations will treat bitcoin and crypto assets as currencies.
— Pomp 🌪 (@APompliano) February 9, 2022
The incoming regulations do not prohibit Bitcoin transactions. Instead, it aims to offer a structure for digital transactions. Furthermore, transactions above 600,000 rubles ($8,000) must be declared. However, Russia would deem such transactions unlawful if they were not declared. In addition, users who illegally receive crypto payments will incur a fine.
The Crypto Ban Debate in Russia: Crypto Regulation or ban?
For several months, Russia’s stance on cryptocurrency remained unclear. However, with its new regulations, the country seems to have warmed up to the digital revolution. Also, the Bank of Russia urged a statewide crypto prohibition in a previous report, citing the industry’s sheer unpredictability. At the time, the bank urged financial institutions to avoid crypto transactions.
However, the call for a crypto ban faced stiff criticism from prominent Russians. As a result, the county’s Ministry of Finance opted for regulation rather than a ban. The European country has always been at the forefront of technological revelations. However, many argue that banning crypto might see it slip as a global tech hub. Furthermore, Russia’s President, Vladimir Putin, backed the notion of a regulation instead of a ban.
On the other hand, the United States sanctioned Russia in 2014 following the invasion of Crimea. Since then, Russia has deeply searched for alternatives to the US dollar in international trade. Putin once accused the US of weaponizing the dollar. However, it is still too early to speculate if Bitcoin is Russia’s alternative.
Possible Impact of Crypto Regulation on Russia’s Oil and Gas Activities
According to Russia, regulating cryptocurrency would bring the industry out of the shadows. In addition, it would aid more legal operations. A statement noted that “ The purpose of the regulation is to integrate the mechanism for the circulation of digital currencies into the financial system and ensure control over cash flows in the circuit of credit institutions.”
Russia is one of the world’s leading oil and natural gas providers. As a result, there are questions if Russia will use Bitcoin for international trades. President Putin previously said that cryptocurrency “has the right to exist and can be used as a means of payment.” However, there are no clear talks on whether Russia would accept Bitcoin for trading oil and other exports.
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