Russia Embraces Bitcoin and Other Cryptos for International Trade, Signaling a New Era of Adoption

Russia's Finance Minister Anton Siluanov has announced that Russian companies have started using Bitcoin and other cryptos for international trade.

Russia has legalized the use of Bitcoin and other cryptocurrencies for international trade, Finance Minister Anton Siluanov has announced.

“Such transactions are already taking place. We think they should be expanded and further developed,” he told Russia 24 TV. He added that this is just “the future of international trade.”

Russia's crypto journey has been interesting to say the least. In 2017, the government showed interest in blockchain technology but quickly banned the use of crypto for payments. The official reason given was concerns about financial stability and preventing illegal activities.

In 2020, the rules were relaxed slightly, with crypto being legalized but still banned from being used in transactions.

However, in 2024, Russia's lawmakers legalized mining, which will come into effect from November 1, and also permitted the use of crypto for cross-border payments. The timing of this move is not coincidental, as sanctions have made traditional trade channels almost impossible to use, leaving crypto as a lifeline.

Russia is not messing around when it comes to crypto mining. In 2023 alone, the country mined 54,000 Bitcoins, generating 50 billion rubles (around $550 million) in tax revenue. With the new laws in place, the potential for growth is huge.

President Vladimir Putin has also shown support for crypto, slamming the U.S. for using the dollar as a political weapon. “The U.S. is destroying the role of the dollar as a world reserve currency,” he said earlier this month, adding that Bitcoin is a viable alternative and “no one in the world can regulate Bitcoin.”

Russia is now the second-largest Bitcoin mining hub in the world, after the United States. This is due to the country's cheap electricity and freezing weather, which are ideal conditions for running mining rigs 24/7.

However, all this mining also comes with a massive electricity bill. In order to keep things in check, the government has banned mining in ten regions, including Dagestan and Chechnya, for six years, starting from January 1.

Additionally, there will be seasonal bans on mining in energy-intensive areas like Irkutsk during the winter.

Eastern Europe is emerging as a crypto hotspot, with Russia leading the way. Between July 2023 and June 2024, the region processed $499 billion in on-chain crypto value, and Russia was ranked seventh worldwide for crypto adoption. These platforms enable users to bypass traditional banks, which have become increasingly isolated due to sanctions.