Luke Rodeheffer
In August, Russian President Vladimir Putin signed legislation formally legalizing cryptocurrency mining (RBC, August 8). The law establishes a registrar, to which each mining operation must be added, along with regulations on how much energy these operations can consume (Kremlin.ru, August 8). The Kremlin has signaled a continued interest in cryptocurrency and blockchain technologies, with new measures expanding their use (see EDM, June 5). Mining had previously operated in a gray legal space, with unsanctioned operations often consuming large amounts of energy from the Russian grid. Calculations from Russia’s National Cryptomining Association show that 54,000 bitcoins, worth $3.5 billion, were mined in 2023, leaving Russia in second place for the amount of money generated from mining after the United States (Vedomosti, May 24). Additionally, Russia’s Central Bank estimated that the amount of money transacted by Russians in cryptocurrency between the 4th quarter of 2023 and the first quarter of 2024 was 4.5 trillion rubles ($49.2 billion) (Vedomosti, May 24). Through the legalization of mining cryptocurrencies, the Russian economy will be able to circumvent Western sanctions more easily.
Putin also signed legislation adopting the use of cryptocurrencies for a pilot project by the Bank of Russia to begin to figure out how to establish a marketplace for the use of cryptocurrencies in international trade (Interfax, August 8). Participants in the project include the Chamber of Commerce, the Electronic Manufacturers Association, and any importers of “dual-use technology” (those that could be used for civilian or military purposes), which face increased scrutiny from Western sanctions authorities (RBC, September 17). In some cases, Chinese banks have refused to facilitate trade with Russian importers, fearing Western sanctions. The ability to use cryptocurrency in international trade will likely reduce the reluctance of international partners to work with Russia.
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