Russia has adopted a new law that also covers cryptocurrencies and aims to reduce dependence on the U.S. dollar. At the same time, it focuses on the development of a unified BRICS currency.
Vladimir Putin, the President of Russia, has approved a new law that aims to reduce dependence on the U.S. dollar in international trade. This law, which also pertains to Bitcoin, will come into effect in November 2024.
Legislation for Miners in Russia
The new Russian law will allow selected mining companies to register through the state registry for cryptocurrency mining. Small-scale miners will be able to mine cryptocurrencies even without official registration, provided their energy consumption does not exceed a certain level.
The mining industry in Russia will be overseen by the following:
- The Central Bank of Russia
- The Ministry of Finance
- A selected cabinet of ministers within the Russian governmentSelected ministers are also expected to establish more precise regulatory requirements in the coming months.
The newly approved law introduces additional challenges for cryptocurrencies, aiming to prevent their promotion among ordinary Russians. For instance, the law prohibits mass advertising of cryptocurrencies in Russia.
In short, it appears that Russia wants to strengthen Bitcoin mining and the industry around it, but does not want Bitcoin to become widely adopted among the general population.
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Vladimir Putin signed law legalizing Bitcoin and crypto mining
Russia Focuses Again on BRICS
In 2023, Russia renewed its interest in developing a unified BRICS currency. Alexander Babakov, Deputy Chairman of the State Duma, stated that leading members of this emerging economic bloc are working on developing a new currency for conducting international transactions.
Subsequently, the Central Bank of Russia and the Russian government announced plans to use digital assets as a method for carrying out international transactions.
BRICS is a group of countries including Brazil, Russia, India, China, and South Africa, whose primary goal is to reduce reliance on the U.S. dollar in international trade.
The idea of an alternative digital currency was first introduced at the 11th Annual BRICS Summit in 2019.
BRICS
Criticism of BRICS
However, the BRICS bloc faces significant challenges, including disagreements among leading member states on how a unified currency should function. It is also unclear whether such a currency would have the potential to surpass the U.S. dollar.
Macroeconomist Lyn Alden expressed doubts that a BRICS unified currency backed by gold could threaten the existence of the U.S. dollar.
Alden pointed out the issue where countries managing paper currencies backed by gold tend to issue far more of these paper currencies than the actual value of their underlying asset, namely gold. This could lead to currency devaluation and ultimately to the collapse of the currency itself.
