Russia Expected to Recognize Cryptocurrency as a form of Payment

In this article, we will understand the reasons why Russia has decided to recognize cryptocurrency as a form of payment.

Given the history of Bitcoin and other cryptocurrencies and the significant changes which this is bringing to the world of trades and financial transaction, many countries and territories have kicked against this unique form of digital trade and transaction, but other countries with Russia as the latest possible addition to accepting bitcoin and other cryptocurrencies as a form of currency.

The Russian government has decided to regulate cryptocurrencies instead of banning them, and this has legalized the $ 2 trillion asset class in the 11th largest economy globally.

Russia, Cryptocurrency
Photocredit: MARCA

On Tuesday night, a document outlining the principles for regulating cryptocurrencies was posted on the 

official government website. In particular, the plan is backed by a central bank that has sought to ban cryptocurrency mining and trading. 

This is the second major regulatory cloud to withdraw from the global crypto market in a month. India took a step towards legalization last week by taxing the transfer of digital assets. Although it carries a high rate of 30%, this has been seen by the crypto community and many others as a step towards legalizing crypto in the fifth-largest economy in the world.

Why will Russia Accept Bitcoin and other Cryptocurrencies as A Form of Currency?  

According to government documents, Russia has a population of 144 million residents, owns over 12 million cryptocurrency accounts, and has about $ 26.7 billion worth of cryptocurrencies.

With Bitcoin Mining, a paper approved by the Cambridge Center for Alternative Finance, the country is ranked third in the world. With such a large supply of cryptocurrencies, law enforcement officials are afraid that they will not properly deal with cryptocurrency-related crimes, the document said. 

However, it missed the rigorous measures proposed by the Central Bank of Russia in January. Central bank reports called cryptocurrencies a threat to Russia’s financial stability and were fraudulent. Regulators have proposed banning cryptocurrency trading and mining in Russia. Instead, Russians have access to digital rubles, central bank digital currencies operated by Russian banks, and digital assets issued domestically by licensed companies. 

In contrast, a draft government released on Tuesday states that cryptocurrency purchases can be made in Russia but will be fully validated by users and make information about transactions available to government agencies. Therefore, it can only be done through a locally registered and licensed company. This document does not cover cryptocurrency mining, and many of the provisions require Congress to pass a new law.

According to research, cryptocurrencies will only circulate in the legal sector if they can be fully identified via the banking system or regulated intermediaries.

The news comes after Russia’s central bank asked for a blanket ban on cryptocurrency a few weeks ago. The ban, introduced in January, forbids cryptocurrency trade, mining, and use. According to reports, just possessing cryptocurrency and no other connected activities will be permitted in Russia if the rule takes effect.

Cryptocurrencies were granted legal status in Russia in 2020, but their payment usage was never permitted. For years, Russia has been a vocal opponent of cryptocurrencies, claiming that they can be used for unlawful purposes, hence calling for regulation.

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How does Russia Recognition of Crypto Impact the Coin Market? 

The bitcoin price increased by around 3% in the United States on Wednesday morning. According to Armando Aguilar, an independent crypto analyst, Russia’s adoption could have “some level of influence” on the bellwether cryptocurrency’s price.

Other market considerations, such as KPMG Canada’s addition of bitcoin to its balance sheet and the US Justice Department’s recovery of $3.6 billion in bitcoin from the 2016 Bitfinex attack, maybe help to boost prices, he said.

This has hopped bitcoin right on the gaining margin after a hard dip that cryptocurrency has faced in recent times, leading to panic sales and clearing of portfolios in the crypto market.

Conclusion

After its early criticisms and ban proposal on Bitcoin, Russia’s potential acceptance of Bitcoin and other cryptocurrencies has surprised many crypto users and investors.

However, there is a silver lining in that Bitcoin and cryptocurrency, in general, are slowly but steadily being adopted by large economies that play a significant part in the global financial system.

Many eager and hopeful crypto users and investors predict that other countries will follow Russia’s lead. China, the United States, and several other countries are among them.

What are your thoughts on Russia’s acceptance of cryptocurrencies as a form of payment and what this means for the cryptocurrency community? Please share your thoughts and ideas.

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