Russia has taken a significant step toward integrating cryptocurrency into its economy by legalizing Bitcoin and cryptocurrency mining.
The move comes as the country seeks to reduce its reliance on the US dollar for international trade, a strategy fueled by the impact of US sanctions and Russia’s exclusion from the SWIFT interbank messaging system.
Russian President Vladimir Putin has signed a new law that will officially come into effect in November 2024, allowing licensed mining firms to register and operate legally.
While large-scale miners will need to register with a state database, individual miners are permitted to mine cryptocurrencies without registration, provided their energy consumption remains under a specified limit.
This legislation marks a clear shift in Russia’s approach to digital currencies, positioning them as a potential alternative for international trade settlements.
The newly legalized crypto mining industry will be overseen by multiple Russian institutions, including the Bank of Russia and the Ministry of Finance.
A select group of cabinet ministers will collaborate to establish detailed regulations in the coming months. In addition to legalizing mining, the legislation includes a ban on mass advertising of cryptocurrencies within Russia, aiming to maintain control over the sector’s growth and influence.
Russia’s move aligns with broader efforts within the BRICS nations—Brazil, Russia, India, China, and South Africa—to reduce dependency on the US dollar.
Since 2019, the BRICS bloc has been exploring the concept of a shared digital currency to facilitate international trade, though progress has been slow due to disagreements among member states.
Despite these challenges, Russia has intensified its efforts to develop a unified BRICS currency, with plans to use digital assets for cross-border settlements.
While Russia and its BRICS partners pursue de-dollarization, the idea of a unified currency backed by gold or other assets faces scepticism. Macroeconomist Lyn Alden has expressed doubts about the feasibility of such a currency, citing historical issues with gold-backed paper currencies.
According to Alden, the risk of monetary debasement could undermine the stability of a BRICS digital currency, potentially preventing it from challenging the dominance of the US dollar.
