Prospects for the growth of the crypto market in Russia
We have already mentioned that Russia is one of the promising countries for the development of the crypto market. Even before the sanctions pressure, there was no consensus in various departments on how to regulate cryptocurrencies: the Central Bank called for prohibitive measures, while the Ministry of Finance and the FSB opposed the ban. The Ministry of Finance proposed a bill aimed at legalizing cryptocurrencies.
Russia has a number of special advantages that make it attractive for the development of the crypto market:
- Affordable electricity is plentiful
- Less power of global financial institutions
- Сold climate
Due to sanctions, the legalization of cryptocurrencies is becoming not only a good, but even a necessary solution. Today we will reveal in more detail the development trends of the crypto market in Russia.
Cryptocurrency as a means of payment for international trade
Prior to the sanctions pressure, cryptocurrency was more often seen as a speculative tool, and sometimes as a hedge against inflation. After Russian banks were disconnected from SWIFT, and foreign sites began to disconnect Russian users from VISA and Mastercard, it immediately became clear why decentralization was needed. Centralized crypto exchanges (CEXs) such as Binance comply with Western sanctions. For example, Binance made payments through VISA and Mastercard issued in Russia inactive, and then completely
restricted access for customers living in Russia, whose assets exceed €10,000. Some exchanges, including CEX IO, blocked the money of Russian customers.
Many freelancers working on foreign sites have lost the opportunity to earn money, large companies can no longer adequately conduct international settlements. After the sanctions, as expected, the attitude towards cryptocurrency in various ministries became more loyal. Russian Foreign Minister Sergey Lavrov believes that a very significant segment of international payments in the near future will be carried out in cryptocurrencies. Minister for Integration and Macroeconomics of the Eurasian Economic Commission Sergey Glazyev insists on the early legalization of cryptocurrencies.
Abroad, Russia’s attempts to circumvent sanctions were quickly noticed. Janet Yellen, US Treasury Secretary also noted that Russia will try to circumvent the sanctions. For this reason, you should not think that this loophole will be easy to use — we have already seen how centralized exchanges like Binance or Coinbase restrict users from the Russian Federation, which means that it is necessary to create domestic platforms for trading cryptocurrencies, including DEX (decentralized exchanges).
Possibilities of exchanging cryptocurrencies into rubles
The Ministry of Finance continues to finalize the bill “On Digital Currency” and it has already become clear how they want to regulate the exchange of cryptocurrency for rubles.
In accordance with this bill, digital currency can be accepted “as a means of payment that is not the monetary unit of the Russian Federation.” However, the requirements for organizing the circulation of digital currencies will be strict. An exchange operator carrying out a sale and purchase on its own behalf must have a capital of at least 30 million rubles, and for a digital trading platform operator, the requirement is 100 million rubles. For many companies, this may turn out to be too high a threshold for entry. Let’s hope that the Ministry of Finance will soften the requirements. But the general trend is rather positive — it will be easier to exchange cryptocurrency for rubles.
Licensing of activities and protection of crypto owners
Although crypto-anarchists may not like this idea, the state can offer a miner or crypto-investor the opportunity to protect his assets in accordance with the legislation of the Russian Federation. Despite the unfinished legal framework in this regard, there were precedents. For example, in early April 2022, the district court in St. Petersburg allowed the investigator to arrest 4,000 stolen ETH. Following the complaint of the victim, a criminal case was opened under articles on theft (part 4 of article 158 of the Criminal Code) and illegal access to computer information (under part 2 of article .272 UK).
If the miner and crypto-investor formalize their activities, they will lose their anonymity and will be forced to pay tax. At the same time, he will be able to count on the fact that his assets will be protected by the state. Many popular public blockchains have an open history of transactions, so it is not so difficult to track the movement of a cryptocurrency.
Mining taxation
Should an industry that can generate good tax revenues be banned? This is another strong argument that prompted the Russian government to be more loyal to the legalization of cryptocurrencies in Russia. The head of the Ministry of Finance, Anton Siluanov, has long been promoting the idea that miners need to be brought into the legal field. The same mood prevails in the Ministry of Economic Development — to allow mining and tax it upon the conversion of cryptocurrencies into rubles.
It is unlikely that a small miner using his pre-sanctioned video card will have a desire to officially register his activity and pay taxes for it, but in the current realities, the payback of this approach is low. If we are talking about legal entities that buy mining equipment in batches and spend a lot of electricity, then their activities are too noticeable not to be registered. One way or another, wages are mainly paid in rubles, with which people buy food in local stores.
Verdict
Russia is confidently moving towards the legalization of cryptocurrencies. The irony of the situation is that in many respects it was the sanctions pressure that led to such a favorable environment for the crypto market. Nevertheless, too rosy pictures should not be drawn either, because the entry threshold for exchange operators and digital trading platform operators in the draft law of the Ministry of Finance is still high. Because of this, many companies, even despite the sanctions, will look for foreign jurisdictions for themselves, and small miners and investors will probably prefer to remain in the shadows. A step towards cryptocurrencies by the government of the Russian Federation is good news, but it is necessary to make the conditions for legalization as soft as possible so that the crypto industry flourishes in Russia, and the state receives additional income and strengthens its currency.
There are also reasons for optimism on the international plane. They lie in the fact that energy prices in Western countries are very high, China is also experiencing an energy shortage and has banned cryptocurrencies. Traditional global financial institutions, which are concentrated in the West, see crypto as a competitor. Russia has already been thrown out of the Western financial system, so there are fewer levers of pressure on it, except for forcing centralized crypto exchanges to take prohibitive measures. But this is a solvable problem, you just need to switch to domestic analogues and DEX.
Use our apps:
Barter Smartplace — trade real and digital assets for cryptocurrency.
Barter Wallet Bot — use free cryptocurrency transfers in Telegram and earn 22% per annum.
Subscribe to read our publications:
NFT-chats in our community:
