Russian President approves bill to ban using crypto for payments in Russia

• The President’s actions follow different opinions about the issue by the nation’s leaders and regulators.
• Despite the ban, Putin has previously shown support for Bitcoin mining.

On Friday, Russian President Vladimir Putin approved the bill that states there should be no use of digital currencies for payments in any part of Russia. The decision follows several long debates between the federal executives and Russia’s apex bank over the nation’s stance on cryptocurrencies.

In January, Russia’s central bank proposed a complete ban on crypto activities for payments, trading, or investment purposes. However, the new law doesn’t fully reflect the Bank of Russia’s intentions. A month after the apex bank’s proposal, Russia’s finance ministry submitted a different proposal.

President Vladimir Putin of Russia has signed into law a bill banning #crypto payments. 🇷🇺

— Altcoin Daily (@AltcoinDailyio) July 15, 2022

The Finance Ministry proposed that Russia allows crypto investments. Crypto investments include owning Bitcoin, Ethereum, and other digital assets. But it should ban the use of cryptos for settling financial transactions. Based on the law signed by President Putin, the government seemed to have followed this ministry’s crypto proposal.

A copy of the new bill is available on the Russian parliament’s website. A Google translation of the document, written in Russian, reads, “there is a prohibition on using cryptos to pay for goods, services rendered and work done or any other form of compensation. It remains true unless overridden by new federal laws, whether temporarily or permanently.”

Many economic analysts have focused on Russia’s moves after being hit by economic sanctions from the US and European Union (EU) following its invasion of Ukraine. Many crypto firms such as Coinbase and Binance restricted Russians from their platforms in compliance with the US and EU sanctions.

Various Russian regulators and central banks have differing opinions regarding crypto activities in the nation. For instance, the central bank proposed a complete ban on crypto-related activities. However, the finance ministry disagreed with that idea. Instead, it suggests that the government should support the development of crypto technology.

Putin supports bitcoin mining

Putin’s comments regarding Bitcoin mining in January this year hinted that the country might not ban crypto activities outrightly. At that time, Putin said Russia had advantages over many other countries that allows Bitcoin mining. Some of the benefits he mentioned were the abundance of electricity and the availability of professionals who can run bitcoin mining operations effectively.

Our data shows bitcoin ends the week trading at $20,585. This price represents a 5 percent drop from last week. Also, Ethereum lost about 1 percent of its value in the last seven days. It currently trades at $1,198.

Russia’s solution to economic sanctions

Many analysts predicted that Russia might turn to crypto to evade economic sanctions. Instead, the Eastern European country is attempting to strengthen its national currency and create the digital Ruble. The government has been discussing the possibility of paying in Ruble instead of the US dollar with nations that buy oil from it. Hungary is among the nations that have accepted Russia’s proposal, but Germany hasn’t decided yet.