For weeks, Russia has been making headlines around the world. It is no secret that it is in conflict with Ukraine, and this has affected the country’s economy after the United States and Europe applied a number of sanctions to prevent Russia from carrying out international transactions normally.
From the moment the US and Europe applied the sanctions, speculation began that Russia might use cryptocurrencies to evade sanctions. Some agreed, others flatly refused, and stock exchanges assured that they would carefully review the situation to prevent sanctioned officials from trading in cryptocurrencies.
In retrospect, although this move seems logical enough given Russia’s current economic situation, it is a marked change for the Russian government. Just look at the statements of some presidents of organizations or the Central Bank of Russia itself.
At the beginning of the year, when the role of cryptocurrencies in the Russian market began to be discussed, the central bank did not agree with the introduction of this type of asset in the traditional system, but it seems that due to a conflict of interest, the possibility for Russia to legalize cryptocurrencies as a freely negotiable asset is no longer just an option but a fact.
Russia can legalize cryptocurrencies at any time
If it had been claimed a year ago that Russia could legalize cryptocurrencies, it would have seemed rather ridiculous, but things are changing, and at this point, cryptocurrencies may be the best option for the Russian government. . Recently, the country’s Minister of Industry and Trade said that the government and the central bank will sooner or later have to legalize the use of cryptocurrencies.
What the Minister is proposing is that these entities should implement new rules to include cryptocurrencies in the financial system so that they can serve as alternative payment tools for users in the country. The main problem is that the Russian government and the central bank are still trying to resolve the disagreements between the two parties. On the one hand, there is the central bank, which rejects this option, but the government is much more open.
It is clear that this decision is not accidental because it is strictly linked to the outbreak of the war between Russia and Ukraine. That is why the Ministry of Finance has put forward a proposal to legalize cryptocurrencies, but it seems that the central bank does not intend to support the proposal, as the ideal way for this entity is a total ban on the use of cryptocurrencies for to protect the traditional economic system, the problem is that the traditional system is blocked.
And when the Minister of Trade and Industry was asked how cryptocurrencies should be regulated, he assured that this is something that should be agreed between the government and the central bank. He did not comment on the approach that these two entities will follow, but he assured that the approval is in sight and that the chances of the government putting more pressure on the central bank are quite high.
The digital ruble
To add the possibility or fact of legalization of cryptocurrencies, Russia has begun planning for the issuance of a digital currency by the central bank, the digital ruble. It should be noted that the Russian government has supported the use of private cryptocurrencies in recent years, claiming that private cryptocurrencies are tools for money laundering and terrorist financing, but if we look at the increase in cryptocurrency exchanges in Russia, we can see that usage has increased and not only among retail investors, as it is speculated that people with high stakes have made large transactions.
The problem with the digital ruble is that it is a very time consuming project. A few weeks ago, there was speculation that the cryptocurrency might be ready for use by the end of the year, but given other cryptocurrency projects of this style, this is a bit likely. China, which has been developing its own central bank currency for several years, has not yet launched it on the market after several tests.
It is estimated that such a project may take about 5 years to be ready. The problem is that Russia does not have this time and needs a quick fix. But the central bank does not make it easy for the government because it is likely to issue rules first before handing over power to the government, and if the government does not change its position, the possibility of a ban is still not ruled out.
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