Russian lawmakers pass bill legalizing Bitcoin mining, crypto payments for international trade

Adoption 1 month ago

The bill, which was first introduced a few years ago, is expected to take effect on Sept. 1,  pending final approval from the federation.

Russia is reportedly exploring the establishment of two crypto exchanges to facilitate foreign economic activities, local media outlet Kommersant reported on Aug. 23.

The proposed exchanges will be located in Moscow and St. Petersburg, serving as hubs for international trade.

Mikhail Uspensky, a member of the State Duma’s legislative committee on crypto regulation, stated that these exchanges will initially be available to a limited number of users. However, they will eventually be made available to major firms, including exporters and importers in the country.

Further, he noted that small and medium businesses and individuals are unlikely to gain immediate access to the exchanges. He stated:

“It is important to emphasize once again that the contours of the future experiment are entirely at the mercy of the regulator.”

Stablecoins

To support this initiative, there would also be efforts to issue stablecoins pegged to the Chinese yuan and the BRICS currency basket.

BRICS is an intergovernmental group that includes Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. The organization aims to unite the world’s leading developing nations to challenge wealthier countries’ economic and political influence.

The Yuan-linked stablecoin is intended to reduce reliance on the US Dollar and strengthen trade agreements among BRICS member states.

Meanwhile, this development follows a statement by Russia’s Deputy Foreign Minister, Sergei Ryabkov, who indicated in May that BRICS nations were considering stablecoins for financial and trade transactions.

Russia’s crypto pivot

These moves further reflect how Russia’s pivot towards crypto has accelerated since facing economic sanctions over its invasion of Ukraine.

Previously, the Vladimir Putin-led country had taken a cautious approach to the emerging industry but has made significant strides toward embracing it this year.

Over the past months, the Russian State Duma passed a bill legalizing Bitcoin mining and also began considering legalizing the use of stablecoins for international payments.

Additionally, the country has plans to advance the use of the Russian Ruble central bank digital currency (CBDC).

El Salvador has reportedly suggested using digital assets like Bitcoin for trade with Russia to circumvent the extensive economic sanctions imposed on Moscow.

Alexander Ilyukhin, Russia’s first secretary at the Nicaraguan embassy and head of its El Salvador office, revealed this in an interview with Russian state media outlet Izvestia.

Bitcoin transactions

The proposed use of crypto aims to address the impact of sanctions and logistical challenges on conventional trade channels. While Russian exports to El Salvador have remained relatively stable, imports have significantly declined.

The implementation of a crypto-based trade mechanism could offer a practical solution to these financial barriers. According to Ilyukhin:

“Calculating transactions is challenging because El Salvador’s official currency is the U.S. dollar. As an alternative, El Salvador suggests using cryptocurrency for trade operations.”

El Salvador became the first nation to adopt Bitcoin as legal tender in 2021 and has firmly positioned itself as a pro-crypto country. This is evident from its daily Bitcoin purchases and several regulations supporting the sector.

However, Ilyukhin mentioned that Russia might find it difficult because crypto use was banned as a legal tender in early 2021. He noted:

“Bitcoin is not widespread in our country, so we are looking for other ways to strengthen trade.”

Despite this, experts believe the proposal could address trade barriers caused by Western sanctions. Due to increased caution among local banks, these sanctions have disrupted Russia’s trade with major partners, including China.

Russia’s recent pro-crypto moves

Recently, the Russian State Duma passed a bill legalizing Bitcoin mining and permitting the use of crypto for international trade.

Russian lawmaker Anton Gorelkin, Deputy Chairman of the State Duma’s Committee on Information Policy, emphasized the bill’s significance in a Telegram post. He highlighted recent updates, saying:

“We managed to cancel the provision banning the organization of cryptocurrency circulation, which in its current version caused quite serious concerns among industry representatives. The ban on advertising digital currencies remains, but will be included in the corresponding amendments to the Federal Law ‘On Advertising.’”

Ukraine wants to launch a new collection of NFTs dedicated to the war against Russia.

The purpose of NFTs in war

This was revealed to The Guardian by the country’s deputy minister of digital transformation, Alex Bornyakov, who said that this collection will be: 

“like a museum of the Russian-Ukrainian war… in NFT format”.

A few days ago Bornyakov himself revealed on Twitter that crypto assets have already proved extremely useful in facilitating funding for the Ukrainian military. 

Crypto assets proved extremely helpful in facilitation of funding flows to the Amed Forces of Ukraine. Huge thanks to everyone who donated to the Crypto Fund of Ukraine.

Each and every helmet and vest bought via crypto donations is currently saving Ukrainian soilders’ lives. pic.twitter.com/CghDmXEcJG

— Alex Bornyakov (@abornyakov) March 11, 2022

So cryptocurrencies and NFTs are being used for two purposes within this conflict: as a system of transferring funds from external donors to the warring countries – especially Ukraine – and as a way of leaving a permanent trace of what is happening. 

Bornyakov’s ministry has also set up a new website to facilitate donations. 

Crypto proved to be a real life saver thanks to its ease of use. We at @mintsyfra made crypto donations even easier. Together with @everstake_pool and @FTX_Official we announce https://t.co/8LsgXj0HSB — a website where you can donate crypto to save Ukraine.

— Alex Bornyakov (@abornyakov) March 14, 2022

The NFT collection of the Russia-Ukraine war

The NFTs in the new collection will be linked to unique works of digital art, and each token will be linked to a work of art representing a war story taken from reliable sources. However, Bornyakov also specified that they will not be available any time soon because it takes time to prepare.

Surely, in addition to the goal of using NFTs to indelibly immortalize what is happening in Ukraine, there is also the goal of raising additional funds, perhaps to be used for reconstruction after the conflict is over. 

The role of crypto assets in the war

Crypto assets are playing an important, though certainly not decisive, role in this war. On the one hand, they are proving to be very useful in transferring funds quickly and easily from all over the world to a country in a state of war, overcoming any barriers or limitations that might be imposed by traditional systems. 

On the other hand, they are adding new digital tools to the arsenal of countries at war, and in this case to state propaganda. 

To all intents and purposes, these are innovations that introduce new methods of fundraising and communication. It is possible that, given the success they have already achieved, they could also be exploited in the future in other similar conflicts, given their relative ease of use. 

It is worth bearing in mind that some of the things that can be done with crypto assets have never really been done before with other technologies, because some of the innovations brought by cryptocurrencies are unique and never seen before. It is up to humans to find new and interesting use cases to make the most of them. 

 

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