In Russia, the situation regarding the acceptance of digital currencies is in a state of flux and the statements of the political leadership are confusing and often contradictory.

Digital currencies will not be banned, even though crypto payments are not allowed following a law that came into force in January last year.

Therefore, trading is allowed as long as it is carried out with foreign exchanges, without worrying about possible legal action at home. The declaration of the vice-minister of finance of the Russian Federation, Alexey Moiseev, confirms this approach:

“Russian citizens can have an open wallet outside the Russian Federation. But if they operate within the Russian Federation then they will be subject to bans, at least in the near future, because of our financial sovereignty.” The deputy minister added. “Lawmakers have yet to properly define digital currencies and blockchain technology in the Russian Civil Code.”

In contrast, during a press conference on December 17, the Governor of the Central Bank of Russia, Elvira Nabiullina, said that banning cryptocurrencies in the country would be “quite feasible.” Nabiullina cited the frequent use of cryptocurrencies for illegal transactions and the significant risks for retail investors.

Coming to 2022 and precisely January 20, the Central Bank of Russia proposed to ban the use and mining of cryptocurrencies on Russian territory, citing threats to financial stability, the welfare of citizens and the sovereignty of monetary policy.

The bank proposed preventing financial institutions from carrying out any transactions with cryptocurrencies and said that mechanisms should be developed to block transactions aimed at buying or selling cryptocurrencies for fiat currencies.

The Bank of Russia went on to comment on mining, “The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said, arguing that crypto mining has created problems for energy consumption.

In August, Russia accounted for 11.2 percent of the global hashrate, which makes it the world’s third-largest player in bitcoin mining, behind the United States and Kazakhstan, although the latter could see an exodus of miners for fear of tighter regulation after unrest earlier this month.

It goes without saying then that at the moment, it is not considered to accept Bitcoin as a payment system, as it could have a negative impact on the country’s financial and economic system. Even if the possibility of a digital ruble that would obviously be issued by the central bank is not despised, whose risks would not be comparable to those of crypto, so much so that a Russian CBDC is conceivable by 2024 (despite the fact that the Russian ruble has lost 44% against gold in the last four years).

But in contrast to previous statements is the country’s manifest desire to reduce the share of the US dollar in the country’s international reserves and its use in clearing with foreign partners. The words of the Russian Deputy Foreign Minister, Aleksandr Pankin, leave little room for misunderstanding: “It is possible to replace the US dollar with other currencies, both national and regional, as well as some digital assets in the long term.” Expanding yuan reserves and increasing gold investments are being considered in this regard, as well as the implementation of digital assets.

The interest in digital currencies for international payments appears to be confirmed by Russian President Putin himself, who has acknowledged the potential of cryptocurrencies to transfer funds globally, while admitting that “it appears too early” for their use to transfer funds globally.