The Russian Parliament has enacted a law allowing the use of cryptocurrencies for international trade and legalizing cryptocurrency mining. The law is aimed at countering the impact of Western sanctions and regulatory constraints on Russian banks, which have disrupted transactions with important partners such as China and India. India, UAE and Turkey.

By legalizing cryptocurrencies for international use, Russia intends to bypass trade restrictions and improve cross-border transactions. While cryptocurrency payments in the country remain banned, the new law reflects a strategic shift, echoing Venezuela's similar use of cryptocurrencies to evade sanctions, which has causing concern for US lawmakers.

The law sets out a legal framework for Digital Financial Assets (DFAs) and Central Bank Digital Currencies (CBDCs), giving the Central Bank of Russia new supervisory powers. These include supervising transactions and requiring all accounting operations related to DFAs to be recorded in Russian systems. The move covers a wide range of digital assets, such as digitized commodities and securities, in order to facilitate international trade.

The legislative change is part of Russia’s strategy to achieve financial independence from external pressure. It seeks to restore efficiency in trade with allied countries and mitigate the impact of sanctions. The law was quickly approved by the legislature and signed by President Vladimir Putin on March 11, 2024, ensuring its swift implementation.

However, the law also poses challenges, such as requiring detailed records of DFA transactions, which can be difficult for foreign partners. The immediate implementation of the law requires businesses and regulators to adapt quickly to comply with the new regulations.

In short, Russia’s new cryptocurrency law represents a significant shift in the country’s economic strategy, aimed at increasing trade and avoiding sanctions. By leveraging digital currencies for international transactions, Russia hopes to enhance its trade capabilities, reflecting the growing importance of digital assets in global finance.

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