Russian President Vladimir Putin publicly said on the 4th that "Bitcoin cannot be stopped". This is the clearest acknowledgment of the growing importance of cryptocurrencies as Russia faces ongoing sanctions.
Putin mentioned the dominance of traditional currencies like the dollar and the emergence of next-generation payment systems at the Moscow forum. He cited Bitcoin as a prime example of a decentralized currency that is immune to external oppression.
Putin Establishes Clarity on Crypto Market Regulation in Russia
Putin also expressed a positive view on the potential of cryptocurrencies, emphasizing that new payment technologies are evolving to reduce costs and increase reliability. He also raised concerns about holding foreign currency reserves, pointing to the risk of political confiscation.
Putin argued for converting these reserves into domestic investments. Western countries have frozen about $300 billion of Russian reserves since the start of the Ukraine war in 2022, which has prompted this shift in perspective.
"Who can ban Bitcoin? No one. Who can prohibit the use of other electronic means of payment? No one. Because these are new technologies," Putin said.
Meanwhile, Russia has introduced significant changes to cryptocurrency regulation. The government recently revised the cryptocurrency taxation framework, exempting cryptocurrency transactions from value-added tax (VAT).
Instead, profits from such transactions are taxed similarly to securities income, with a 15% personal income tax cap on cryptocurrency-related gains.
However, the authorities have cracked down on cryptocurrency mining in certain regions. Mining activities have been prohibited in the occupied Ukrainian territories of Donetsk, Luhansk, Zaporizhzhia, and Kherson.
Additionally, Siberia, known for its large-scale mining operations, faces seasonal mining restrictions from December 2023 to March 2031. Some regions will see a complete mining ban starting in December 2024, with winter power shortages cited as the primary reason.
Nevertheless, cryptocurrencies are gaining wider acceptance within the Putin government. A law allowing the use of cryptocurrencies in foreign trade transactions came into effect on September 1st. The full regulation of this activity is still ongoing.
Putin is also reportedly planning to launch state-backed cryptocurrency exchanges. These developments highlight Russia's growing interest in leveraging cryptocurrencies amid economic sanctions.
