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Russian Minister Labels Crypto as Evil, Yet Praises Its Role in Foreign Trade

2 mins
Updated by Geraint Price
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In Brief

  • The Russian government may pass crypto-friendly legislation this year.
  • Russia has resisted retail crypto use.
  • The Kremlin recently eased mining restrictions.
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Russia’s Deputy Finance Minister Alexei Moiseev said at a banking conference last week that crypto is “evil,” except when used for imports and exports.

The Minister said the State Duma Committee on the Financial Market is reviewing a bill sanctioning crypto’s use in foreign transactions.

Central Bank of Russia Shifts Crypto is “Evil” Narrative

Upon the bill’s passage, a committee of officials from law enforcement, Russia’s central bank, and government ministries can license individual operators to use digital currencies for international commerce. 

Originally slated for passage in January, the bill could be postponed until the end of 2023, the finance minister said.

The central bank said in September that its cross-border settlements were unavoidable.

Following U.S. sanctions last year, Russia signaled it could sell natural gas for Bitcoin. Foreign trade partners restricted Russia’s trade to hinder its military capability after it invaded Ukraine.

Accordingly, the International Monetary Fund (IMF) estimated that Russia’s imports dropped by about 15% last year, while exports declined by 8.7%. World Bank estimates are more conservative at 9.7% and 9.6%.

For 2023, the World Bank and IMF predict that Russian imports will increase, with exports maintaining the same level or decreasing.

Russia imports and exports. Percentage Trading Volume Change in Russia Compared to 2018 (100) | Source: European Council
Percentage Trading Volume Change in Russia Compared to 2018 (100) | Source: European Council

February data from Statista estimated China as Russia’s largest trading partner in 2021, with $141 billion in import and export volume. Germany followed with about $57 billion, while the Netherlands exchanged $46 billion with the Kremlin. 

Russia Approves Blockchain but Rejects Crypto Payments

Under first reading, the State Duma recently passed a bill allowing financial marketplaces to integrate blockchain platforms issuing digital financial assets (DFAs).

Financial marketplaces are digitally-accessible financial supermarkets offering banking insurance and related services. DFAs are centrally administered digital currencies.

The Duma recommended last October that Parliament reject a bill on cryptocurrency mining because it arguably legitimized crypto payments. The Russian constitution does not allow the issuance of currency other than the Russian ruble.

The government recently offered concessions to allow mining provided miners declare earnings. Miners failing to declare income of $200,000 twice in three years will face jail time and forced labor.

Miners earning $600,000 could face up to four years of prison time and forced labor for tax evasion.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...