Russia legalizes international bitcoin payments

Bitcoin is set to conquer the US Congress, but also Russia. The Duma is counting on bitcoin to circumvent sanctions.

Bitcoin, Da

The Russian parliament has adopted in first reading a law to legalize international payments in bitcoin. 404 votes in favor and zero votes against. The final vote will take place on July 30 for entry into force as of September 1, 2024.

This new legislation is highly anticipated as it will help the country to do without the SWIFT network which controls most international transactions. Moscow has been disconnected from it for two years now.

“This is a need for businesses, especially those impacted by sanctions, i.e. those operating internationally. It is not always possible to resolve payment issues through standard methods.”said the head of the federal financial watchdog Yuri Chekhanchin.

The downside of this law is that bitcoin payments will not be allowed domestically. Unfortunately, the Russian central bank is keen on it, 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 part of the law that has been widely criticized is the ban on advertising for cryptocurrencies. This would go against the grain of history. According to a survey conducted by the Russian Public Opinion Research Center20% of Russians say they know about cryptocurrencies.

The Mining Industry Regulated

The bill sets clear rules for bitcoin miners. They will have to register with the state and report their electricity consumption. Hence the recent warnings from the Russian president.

However, ordinary citizens will 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 Taxes Committee, this regulation will make it more difficult to use bitcoin for illegal transactions. The Ministry of Digital Development will monitor the addresses that miners use to receive their bitcoin harvest from pools.

In this regard, the MP 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.

Miners will also have to sell their bitcoins only on accredited platforms. The aim is to prevent unauthorized transfers of capital abroad using bitcoin.

So, despite some futile safeguards, bitcoin holds its letters of nobility. Russia will not let the United States “mine all remaining bitcoins”to use Donald Trump's words.

With the issue of the international monetary system at the heart of geopolitical tensions, bitcoin increasingly appears as a way out.