Two days ago, on 4th August, President Putin signed a law legalising crypto trading in Russia.
An Overview of the Details
Crypto mining has been legal in Russia for a few years now, with some limitations by region depending on the amount of surplus electricity available. However, trading has been (at least notionally) illegal.
The new law allows private investors to buy up to 300,000 roubles worth of crypto - around $3800 - per year through each licensed platform. This will be accompanied by a basic knowledge test, similar to the one those of us in the UK have to deal with. Professional investors will still have to do the test but the currency limit won't apply.
The licensed platforms will be severely limited in which crypto's they are allowed to trade. Initially, it is only those with a market cap over 5 Trillion roubles (about $64 Bn) and high average daily volumes. Right now, that means only BTC, ETH and USDT.
There will also be a register of who holds what (which is very sad for those of us who support the idea that crypto should be relatively anonymous and free of government oversight), and it will still be illegal to use crypto for payments within Russia.
Image by Peggy und Marco Lachmann-Anke from Pixabay
What Does this Mean For Russian Crypto Users
What this law does is try to put some structure and regulation around what in reality has been a booming unofficial market. Despite exchanges being illegal until now, Russians have still found ways to get and move crypto.
The new law is still highly limited and does nothing for privacy. However, it should make it much easier for ordinary Russian citizens to get an on-ramp to buy crypto. Once they've bought the stuff, a combination of Russian ingenuity and the inefficiencies of the bureaucracy will make moving crypto around easier and I predict the list of holdings will rapidly become purely notional.
So it'll allow ordinary Russian citizens to use crypto to pay for goods imported from non-Western countries, as well as to pay for online services from anywhere. Goods from Western countries will still be out of bounds unless they can route them indirectly, as Western governments ban their postal services delivering to Russia.
Is There An Overall Impact To Crypto Markets ?
Overall, I don't think this will have a big impact. We might see a few more ordinary Russians turn up in crypto-enabled places, but it's not going to move the needle significantly on volumes trades.
To touch on the inevitable and controversial question, I don't expect it to make any difference in the war between Russia and NATO. We're not going to see a rush of Russians buying drone components; why do this, when it's easier for the Ministry of Defence just to order them centrally and stick them on a train from China ?
Ironically, the biggest impact is likely to be on small businesses in Asian and African countries who will be able to sell goods to Russian citizens without having to go through Western financial services like SWIFT, and on Russian citizens themselves who will be gaining an on-ramp after which they can move crypto as they like.
So all in all, this isn't earth-shaking, but I believe it's a small step in the right direction, especially when it comes to ordinary crypto users rather then financial institutions.
2 comments
This makes me worried the rest of the world will become even stricter on crypto. just as a way to punish russia.
Good point ! I think the world's governments want to regulate crypto anyway, controlling it through regulatory capture and takeover by legacy finance businesses, so Russia might end up being an excuse but I don't think it'll actually change what governments are doing. The ice thing is that Hive, Monero and a few others are relatively resistant to that kind of control.