Russia Crypto Mining Makes U-Turn As Deputy Energy Minster Calls For Legalization

Russia Crypto Mining

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Russia Crypto Mining

Russia is looking towards cryptocurrencies in the face of biting economic sanctions. This is evident with the recent call by its official for crypto mining to be legalized as soon as possible. This and the decision to receive payment for oil and gas in bitcoin is a major shift from the federation’s position on cryptocurrencies a few months ago.

Central Bank’s Position on Cryptocurrency and Crypto Mining

Per a January 20th report by Reuters, the Russian central bank proposed a ban on crypto and crypto mining citing threats to financial stability, citizens’ well-being, and its monetary policy sovereignty. This came after the federation gave crypto legal status in 2020 but banned it as a means of payment.

The stand on crypto seems to be gradually crumbling in recent times as the federation sets its sight on it as a way out of the effect of biting economic sanctions by the US and its allies.

Post-sanction U-turn on Cryptocurrency

A few days ago, Russian lawmakers in a bid to offset the crippling economic consequences of the sanctions imposed on the federation, proposed to receive Bitcoin as payment for oil and gas from friendly countries.

Pavel Zavalny, head of the Russian Federation State of Duma committee on energy stated that;

“Moscow will sell raw materials to friendly states for yuan, lira, dinars, and even bitcoins, and to unfriendly states for rubles and gold, forcing them to either buy Russian currency or share their gold reserves with Moscow.”

He further stated that:

“Gas will be the first step, then the Russian Federation will transfer all commodity trade with Western countries to the ruble. It makes no sense for Moscow to keep trading in euros and dollars, given that the West has blocked Russia’s settlements in these currencies.”

This policy is geared toward the de-dollarization of the Russian economy, and boosting its gold reserves. What is of interest in it is the addition of Bitcoin as a payment for oil and gas which might be interpreted as a possible transition to a digital economy by the federation.

Deputy Minister Calls For Legalization of Crypto Mining

According to Tass, a Russian news agency, the Russian Deputy Minister For Energy Evgeny Grubchak, said that the legal vacuum in the field of crypto mining needs to be eliminated.

Grubchak said that:

“The legal vacuum makes it difficult to regulate this area and set clear rules of the game. This legal vacuum needs to be [eliminated] as soon as possible. If we want somehow to get along with this activity, and we have no other options in the current reality, we must introduce legal regulation, adding the concept of mining to the regulatory framework,”

This means that the federation might be looking at exploring the option of mining crypto with its energy reserves “in the current reality” of the biting sanctions imposed on it. A move that is similar to the precedence set by Iran which has been a concern to the West since the sanctions were imposed on the federation.

Grubchak further suggested that:

“It would be more efficient to determine sites for mining and to free energy capacities for miners at the regional level, and not at the federal level, and this needs to be regulated with regional development plans”