- Russia is set to legalize the use of cryptocurrencies
- After sanctions, the Ruble-US dollar parity exchange rose to 132 and currently stagnates at 100.
- The move will likely take place sooner or later
According to Denis Manturov, the Minister of Industry and Trade in Russia, the Russian Federation is set to legalize the utilization of cryptocurrencies.
Despite the differences between the systemic operations of both the Central bank and the Government, the move will likely take place sooner or later.
Manturov also insisted that the Central Bank and the government have joined arms to ensure the enrolment of this initiative in times of war in Ukraine.
Russia plans to roll out its digital currency while at the same time acknowledging the use of private cryptocurrencies. This is despite the allegations that private cryptocurrencies may be used in cases of financial terrorism or money laundering.
To ban or not? Russia is undecided
In a controversial move, the Central Bank, through Governor Nabiullina Elvira, laid a proposal to ban the trading and mining of cryptocurrencies which account for $5 Billion of transactions per year on Russian soil.
In 2021, the Central Bank officials claimed that cryptocurrencies would lead to financial instability and that crypto would not favor the Russian financial market.
The Ministry of Finance in Russia is seen backing cryptocurrencies. The Minister of Finance in collaboration with Vladimir Putin has called for the Central Bank and the Regulatory Agencies to settle their differences and come to an agreement.
Russia’s President, Vladimir Putin, revealed that upon regulation and fiscal monitoring, cryptocurrencies would be crucial to the economy of Russia especially due to its natural resource reserves.
In February 2022, the Russian Government passed a motion to regulate Bitcoin and other cryptocurrencies.
The Ministry of Finance drafted a Proposal and submitted a bill that was meant to steer the legislation process of regulating Bitcoin and other Cryptocurrencies.
A review of taxation rates on transactions of cryptocurrencies was also suggested.
The Central Bank has also permitted Russian Banks to create cryptocurrency exchange systems under the supervision of the Central Bank with regulatory procedures that have been in place since 2020.
The country’s journey to adoption
Based on a study done on February 2022 by Binance, the amount of Bitcoin traded in Russian rubles was 100BTC as of 23rd February, the eve of the War in Ukraine.
At the Onset of the war in Ukraine on 24th February, there was a 300% rise in Bitcoin to the Ruble exchange and by 5th March, it rose to nearly 500BTC.
Financial forecast reports suggest that the total crypto assets acquired by the Russian citizens in 2020 are estimated at $180-200 Billion.
When sanctions were imposed on Russia by the US and the EU, the value of the Russian ruble declined dramatically. Before the war, the Ruble-US dollar parity exchange rate was at 75-80 but after sanctions were imposed, it rose to 132 and currently stagnates at 100.
Cryptocurrency incorporation was heavily criticized before the war with a push to have them banned. During the war, citizens were prohibited from sending foreign currency to other states but no restrictions were inflicted on cryptocurrencies.
Later on, the Russian government announced a no-ban action plan coupled with a regulatory framework under the legislation.
