- Russia’s crypto legalisation will challenge some Western sanctions.
- Putin’s new pro-crypto stance expands potential for alternative currencies.
- Russia is positioning itself to surpass the US in crypto mining.
Russia’s recent crypto pivot will make it harder for the West to impose sanctions and will reduce the country’s reliance on the US dollar.
That’s according to a report by crypto research firm Chainalysis, released after President Vladimir Putin signed two bills into law last month, legalising crypto for cross-border payments and allowing crypto mining in Russia — a shift from 2022 when the Central Bank of Russia called for a complete ban.
The report highlighted a warning by Putin to “not miss the moment,” signalling Russia’s intent to reduce its dollar dependence, allowing it increased economic sovereignty along with the ability to evade some Western-led sanctions.
“These legislative changes are likely to enhance Russia’s ability to engage in international trade through cryptocurrency,” Chainalysis said.
They will also lead to increased use of alternative currencies, possibly new stablecoins based on China’s yuan or BRICs currencies. The analysis, citing an August 26 Bloomberg report, noted that Russian crypto payment trials began this month.
The changes will also heighten vigilance among Western authorities, especially regarding Russia’s more important trade partners, including China and Iran.
Chainalysis said that while large-scale sanctions evasion is unlikely amid the limited liquidity of crypto markets and transparency of blockchain technology, smaller-scale sanctions evasion on-chain can still have meaningful implications for national security, compliance, and investigations.
DL News reported that in June, the EU adopted a 14th set of sanctions on Russia for its invasion of Ukraine in 2022. European banks are prohibited from connecting with the Russian financial transfer system, and crypto platforms are barred from facilitating transactions for any companies or organisations that help Russia replenish its arms supplies and military technology.
Still, under its new pro-crypto laws, Russia “is positioning itself in an attempt to surpass the United States as the global leader in cryptocurrency mining,” Chainalysis said, as well as creating challenges for Western authorities in classifying Russia’s crypto mining and exchanges and adjusting sanctions to effectively target them.
Crypto market movers
- Bitcoin is down 3.90% today at $54,185.80.
- Ethereum is down 5.02% today at $2,259.05.