Tkachev noted that the use of cryptocurrency in Russia is very limited as is and it is insufficiently regulated by the state. This new directive – which will keep cryptocurrency legal, including its individual possession – is part of the Kremlin's efforts to amend this. (Related: Russia to establish a national cryptocurrency exchange.)
Once the updated regulations are implemented, Tkachev explained that Russian individuals will be barred from using cryptocurrencies to conduct internal transactions. It is unclear when these new amended laws will come into force.
While Tkachev noted that the Kremlin wants to discourage citizens from using crypto in the domestic economy, he conceded that cryptocurrency will likely continue to play a role in the economy.
"The state cannot officially carry out transactions in cryptocurrency yet. And Russian companies, trading with colleagues from other countries, unfortunately, are also limited in their capacities [to use crypto]," said Tkachev. "But I think that this will change."
Meanwhile, Russian businesses will be allowed to conduct cross-border transactions with cryptocurrency, as using crypto allows Russia to circumvent Ukraine-related Western sanctions amid the ongoing Russian special military operation, which has cut Russia off from the Western financial system.
"Companies that trade using cryptocurrencies are not subject to sanctions pressure, because tracking payments becomes much more difficult," said Tkachev.
Tkachev noted that the Ministry of Industry and Trade has already developed the proper tools and systems for conducting cross-border payments using crypto. The system is currently being tested and is expected to be introduced by early 2024.
"Once the testing is complete, the government will be able to carry out transactions in cryptocurrency officially," said Tkachev, noting that Russian businesses will also be given the option to pay foreign partners either in the digital currency known as the digital ruble or in crypto.
"The digital ruble is currently used only within the country, so far there have been no cross-border transactions," said Tkachev. "But the digital ruble makes it possible to conduct transactions without intermediary financial organizations," solving the problem of international settlements amid sanctions.
In terms of cryptocurrency mining, Tkachev noted that the Center of Economic Classifications, a federal agency that acts as a regulator and watchdog for legal economic activity, is preparing new rules for "industrial [cryptocurrency] mining."
"Everything is pointing to the fact that mining will be legalized, but only for legal entities," said Tkachev. "As such, according to the current thinking of the federal government bodies – and the State Duma agrees – individuals will not be able to do this [cryptocurrency mining]."
In preparation for the creation of new crypto mining rules, the Kremlin created the nation's first industrial cryptocurrency mining body, the Industrial Mining Association.
"The association should soon develop into a self-regulatory organization that will be able to shape trends in the sector," said Tkachev.
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