Russia’s Duma to ban cryptocurrency as form of payment

abdelaziz Fathi

Russian lawmakers will vote on a new bill to prohibit cryptocurrencies and digital tokens  as a means of payment in the country.

russia

Per a recent report from local news outlet RIA Novosti, Anatoly Aksakov, Chairman of the Financial Market Committee has submitted the bill to the State Duma. If the draft was approved by the committee, the members of the lower house are expected to vote on the legislation on first reading next week.

Mr. Aksakov told the publication that cryptocurrencies, in his opinion, cannot be equated with fiat money and cannot be legal tender. He added that the ruble is the only legal tender in the Russian Federation.

If a decision is made on the legislative level, the law will explicitly prohibit crypto payments inside the Russian Federation.

Until today, crypto in Russia has existed in a legal gray area. Locals were allowed to buy and exchange cryptocurrencies, but companies and exchanges dealing were often under a close watch by law enforcement agencies. According to industry estimates, the annual volume of crypto transactions in the country is around $5 billion.

But faced with stiffening sanctions over its invasion of Ukraine, Russia was reportedly mulling the idea of accepting Bitcoin or other cryptocurrencies as payment for its international trade.

Russia has earlier floated the idea of allowing cryptocurrency to be used as payment for its oil and gas sold to “friendly countries.”  At the time, head of energy committee, Pavel Zavalny, said China and Turkey could begin paying for energy in Russian roubles, Chinese yuan, Turkish lira — or even Bitcoin.

According to a report from Russian state news agency TASS, Industry and Trade Minister Denis Manturov said “The question is when it will happen, how it will happen and how it will be regulated. Now both the Central Bank and the government are actively engaged in this.”

Just days before Russia’s invasion of Ukraine, the central bank said it wants to prohibit the use and mining of cryptocurrencies, arguing that they could be used to threaten its monetary policy sovereignty and the country’s financial stability. Further explaining its unfavorable stance against cryptocurrencies, the regulator argued that they could be used to fund terrorism and result in money laundering.

The central bank believes that cryptocurrencies carry the hallmarks of a Ponzi scheme, warning of potential bubbles in the market. Russia’s apex bank also voiced concerns about risks to financial stability due to the high volatile nature of crypto transactions.

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