• Russia to legalize crypto for cross-border transactions.

  • New legislation aims for 2024 implementation.

  • Proposes 20% tax on crypto mining to boost the economy.

Russia is expediting its efforts to legalize cryptocurrency for cross-border transactions amidst increasing Western sanctions. Led by the Ministry of Finance and the Bank of Russia, the initiative reflects a significant shift in the country’s approach to digital assets.

Previously, Russia maintained a conservative stance on cryptocurrency. Since the adoption of the “On Digital Financial Assets” law in 2020, the country banned its use as a payment method within its borders. The Bank of Russia, in particular, opposed the domestic use of cryptocurrencies over concerns about destabilizing the national currency, the Ruble. However, the evolving geopolitical crisis with Ukraine compelled a reevaluation of this policy.

Following the imposition of heavy sanctions, Russia’s interest in digital currencies grew as it explored ways to circumvent economic obstacles caused by the penalties. Deputy Finance Minister Alexei Moiseev has called for establishing a legal framework for cross-border crypto transactions.

He pointed out that many Russians were forced to rely on foreign platforms for crypto services, underscoring the need for local alternatives that comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. The proposed legislation aims to allow legal cross-border payments without integrating cryptocurrency into Russia’s domestic financial system.

This move has secured key support from high-ranking Russian officials, including the State Duma, which has been advocating for allowing miners to sell cryptocurrency as an export product. The proposed legislation is expected to be in place by the latter half of 2024, marking a significant milestone for Russia’s crypto industry.

Additionally, the authorities are also considering imposing a 20% income tax on cryptocurrency miners to bolster the national budget and tap the burgeoning crypto market to contribute to the country’s economy.

However, the Bank of Russia remains steadfast in its stance against using cryptocurrency as a legal tender within the country. Rather than altering the domestic financial ecosystem, the central bank aims to enable cross-border crypto transactions to mitigate the impact of sanctions.

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