In a recent statement by the government and the Bank of Russia, there is a consensus by authorities in Russia to start treating Bitcoin as an analogous cryptocurrency.
An official circular stated that from February 18, a draft law already in circulation would be in effect to ensure that cryptocurrencies are no longer considered as financial assets but analogous to currencies.
A Way To Circumvent US Sanctions?
The proposed law also stated that the circulation of assets that are in the excess of 600,000 ruble would be declared by the sender or face criminal prosecution.
The news came at a time that tensions are high between the Russian Federation and Ukraine and in the event of a conflict, there is a likelihood of a sanction against Russia by the US and its allies. It is possible that the move was to forestall financial isolation in case of escalation.
On January 20, the US president had threatened that the country would be hard-pressed finding funds in USD if they attack Ukraine. According to a statement from President Biden,
“If [Russia] invades, they’re going to pay; their banks will not be able to deal in dollars.”
The Moscow Times had reported that the objective of the Biden administration would be to cut Russia off from the global financial sector. What we may be witnessing is Russia’s own move to ensure that they whittle the effects of a sanction through the use of cryptocurrencies.
This could also explain why regulators in the US are working on regulatory guidelines for cryptocurrencies which many in the US consider a national security issue.
Bitcoin is Not Prohibited in Russia
The release stated that holding and transacting with BTC and other cryptocurrencies in the Russian Federation is not prohibited. It however added that for such p2p transactions to take place, that the exchange must be licensed in the country.
Many financial analysts believed that the recognition and adoption of cryptocurrency assets was a long way off. With the recent move by Russia, cryptocurrencies would make inroads faster than people anticipated.
Some countries such as Italy already view cryptocurrencies as foreign currencies from the taxation point of view, while El Salvador has already adopted it as a legal tender. The move by Russia is another step towards mass adoption since there’s now a legal framework that enables Russians to legally own cryptocurrencies.