Russia Legalizes International Payments in Bitcoin
Bitcoin is on the verge of conquering the US Congress, but also Russia. The Duma is counting on bitcoin to circumvent sanctions.
Bitcoin, Da
The Russian Parliament has passed a law in the first reading to legalize international payments in bitcoin. 404 votes in favor and zero votes against. The final vote will take place on July 30 for implementation by September 1, 2024.
This new legislation is highly anticipated as it will help the country to dispense with the SWIFT network, which dominates most international transactions. Moscow has been disconnected from it for two years now.
“This is a need for businesses, especially those affected by sanctions, that is, those operating internationally. It is not always possible to solve payment problems through standard methods”, said the director of the federal financial monitoring agency Yuri Chekhanchin.
The downside of this law is that bitcoin payments will not be allowed domestically. Unfortunately, the Russian central bank holds firm on this, as it seeks to popularize its CBDC.
But what exactly is the central bank afraid of? Bitcoin payments can only be marginal given the high conversion and transaction fees. Bitcoin is not competitive compared to Visa, the Russian equivalent Mir, or its CBDC.
Another heavily criticized aspect of the law is the ban on advertising for cryptocurrencies. This would be going against the tide of history. According to a survey conducted by the Russian Public Opinion Research Center, 20% of Russians claim to be knowledgeable about cryptocurrencies.
The Mining Industry Regulated
The bill sets clear rules for bitcoin miners. They will have to register with the state and declare their electricity consumption, hence the recent warnings from the Russian president.
Average citizens will still be able to mine without registering if they comply with the energy consumption limits set by law. The government, in agreement with the Bank of Russia, will set these standards.
According to Nikita Chaplin, a member of the budget and tax committee, this regulation will make it more difficult to use bitcoin for illegal transactions. The Ministry of Digital Development will monitor the addresses miners use to receive their bitcoin earnings from the pools.
On that note, the deputy revealed that Russian miners generated 54,000 BTC in 2023. This figure suggests that at least 16% of the global hashrate is located in Russia.
Additionally, miners will have to sell their bitcoins only on accredited platforms. The aim is to prevent unauthorized capital transfers abroad via bitcoin.
Thus, despite a few trivial safeguards, bitcoin holds its own. Russia will not let the United States “mine all the remaining bitcoins”, to quote Donald Trump.
As the issue of the international monetary system is at the heart of geopolitical tensions, bitcoin increasingly appears as an exit solution.
