Russia Heats Up To Crypto In A Quick Turnaround

Just a few months ago, Kremlin bureaucrats were as cold to the idea of ​​cryptocurrencies as winter in Siberia.

Then came the invasion of Ukraine and sanctions by a wide range of countries that crippled Russia’s access to the global banking system. Suddenly, an inexpensive, anonymous method of making cross-border payments that also threatened the dollar’s privileged position as the world’s reserve currency stopped seeming such a bad idea.

Now, Moscow is actively turning to crypto, planning a digital ruble early next year as it seeks to modernize its financial system and increase its influence in the global financial system. Meanwhile, the European Union has other ideas and last week tightened restrictions on the presence of cryptocurrency in Russia.

“The topic of digital financial assets, digital ruble and cryptocurrencies is currently escalating in society as Western countries impose sanctions and create problems for bank transfers, including in international settlements,” said said Anatoly Aksakov, head of the Russian Duma’s financial committee. Quoted by Reuters as a parliamentary newspaper recounts.

“If we launch this, then other countries will start actively using it in the future, and America’s control over the global financial system will effectively end,” Aksakov added.

Deputy Finance Minister Alexei Moiseev said earlier last month that Russia’s central bank agreed to plans to legalize crypto for cross-border payments.

“But now the United States is increasing the sanctions,” says Omid Malekan, an adjunct professor who teaches blockchain and crypto at Columbia Business School. “It incentivizes countries to try and find an alternative currency to process it for things like cross-border trade, because then you’re no longer at the mercy of US economic sanctions.”

The change of heart comes after the country requested a comprehensive ban on cryptocurrency operations, including trading, issuing and mining in January. Then, in July, President Vladimir Putin signed a bill banning the use of cryptocurrency as payment for domestic goods and services.

Seeking to thwart Russian attempts to retain a place in international finance, the European Union will not allow the country’s citizens to hold assets in EU cryptocurrency wallets. But that could be an empty threat.

“If it’s a non-custodial wallet like Metamask, that’s an absurd statement, every user does it locally on their own device and can do it from anywhere. We can’t know where they are. physically,” says Malekan. “If it’s a custodial wallet, the asset holder knows your client.”

Moscow would show its newfound appreciation for cryptocurrencies in other ways. He is Planning to supply electricity to power-hungry crypto-mining farms in neighboring Kazakhstan, electricity monopoly Inter RAO dealing directly with companies from the former Soviet republic, quoted Russian news portal RBC Commercial
as told.

Meanwhile, pro-Russian groups are using cryptocurrency to raise money for war operations through encrypted messaging app Telegram, Chris Janczewski of TRM Labs said on CNBC. He said $400,000 had been raised since Russia invaded Ukraine in February and the amount was likely to increase.


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