Russia Legalizes Crypto for International Settlements to Evade Sanctions

Russian lawmakers pass a bill to legalize cryptocurrencies for global transactions amidst ongoing Western sanctions.

Russian lawmakers have approved legislation allowing the use of cryptocurrencies for international settlements, aiming to circumvent sanctions imposed by Western nations. Expected to be implemented by September, this law could facilitate the first crypto transactions by year-end.

Since the war in Ukraine began in January 2022, Russia’s economy has grappled with international transfers, hampered by sanctions from Western financial institutions, which complicate transactions with key trading partners like China, India, and Turkey.

Anatoly Aksakov, head of the Duma’s financial market committee, informed Bloomberg that under the new bill, cryptocurrencies would be subject to the same regulations as foreign currencies such as the U.S. dollar in Russia.

Initially, Russia had imposed a blanket ban on crypto payments at the start of the war. However, it later permitted financial services firms to trial crypto for specific use cases. Many countries facing heavy sanctions, including Venezuela, already employ crypto for international transactions.

Russian crypto analyst Ani Aslanyan anticipates limited crypto participation to large- and mid-size companies, given the complexities of adhering to the new legislation. Aslanyan also foresees increased scrutiny from countries like the U.S. regarding Russian crypto activities following the new bill.

Several firms have faced fines for assisting Russian banks in using crypto. Last month, Lithuania fined crypto firm Payeer 9.3 million Euros for allowing Russian customers to transfer money to EU-sanctioned Russian banks.

Elvira Nabiullina, governor of the Russian central bank, has expressed optimism about developing international payment systems that bypass Western institutions in response to sanctions. Additionally, lawmakers are set to vote on new regulations for crypto mining.

Russia, with its cheap energy and favorable climate in areas like Siberia, ranks among the top crypto-mining nations globally. According to the Russian finance ministry, the country was the third-largest producer of Bitcoin in 2024. However, President Vladimir Putin has warned that unregulated crypto mining could lead to electricity shortages.

photo source / Blockonome