Ukraine war: Russia to legalise cryptocurrency for payments as sanctions weigh on companies

Russia is moving to regulate the use of cryptocurrencies, as companies wrestle with increasing difficulties in foreign payments under the threat of US sanctions over the war in Ukraine.

Lawmakers in the lower house of parliament, the State Duma, will consider a cryptocurrency bill in the second and third readings on Tuesday, as well as separate legislation regulating crypto mining.

The draft laws are also expected to gain quick approval from senators in the Federation Council before being signed into law by President Vladimir Putin to take effect on September 1, according to Anatoly Aksakov, head of the Duma’s financial market committee.

“Previously, there were fears that the legalisation of cryptocurrency could create problems for the development of the domestic market,” Aksakov said in a phone interview. While cryptocurrencies may help Russia to bypass Western sanctions, their use is “an objective phenomenon and cannot be ignored” by regulation, he said.

The move marks a rapid shift in attitude toward digital instruments, and comes as Russian businesses confront growing payment pressures triggered by US threats of secondary sanctions on foreign banks. While the use of digital currency for payments is currently prohibited in Russia, Putin this month called on the government “not to miss the moment” in regulating the method inside the country and in foreign deals.

Cryptocurrencies “are increasingly used in the world as a means of payment in international settlements,” Putin told officials.