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Russia might legalize cryptocurrency as a form of payment

Russia's Industry and Trade Minister said that the government and central bank would "sooner or later" legalize crypto as a m

Moscow seems to be changing its stance and will include cryptocurrencies in its financial systems as a legal tender.

‘Either Now Or Later’

On Thursday, Denis Manturov, Russia’s Industry, and Trade Minister said that the government and central bank would “sooner or later” legalize cryptocurrencies as a means of payment. He said that the administration and central bank are getting closer to a solution to implement this.

Moscow has stated its intention to create a central bank digital currency, but it has previously discouraged the use of private cryptocurrencies.

The governor of the Russian central bank, Elvira Nabiullina, recently stated that the bank could not take cryptocurrency investments. These account for around $5 billion in yearly Russian transactions. Elvira has advised that cryptocurrency trading and mining should be prohibited.

However, Manturov believes that the government and the central bank are getting closer to resolving their disagreement.

The finance ministry recommended legislative and other measures that have been incompatible with the national bank’s demand for a comprehensive prohibition before Russia’s incursion of Ukraine on February 24.

Russia is taking steps to legalize cryptocurrency

Manturov was questioned at a forum if he thought cryptocurrencies would become permissible as a way of paying.

“When this happens and how it will be controlled, central bank and administration are actively working on it,”

Manturov said.

“However, the broad opinion is that this will be adopted sooner or later,” the Russian official said.

Russian banks have been allowed to open cryptocurrency exchanges under the central bank’s jurisdiction from 2020. It also provided to mint new digital currencies, but only under the central bank’s jurisdiction.

This shows a more pragmatic attitude to cryptocurrencies and their acceptability in Russia, as opposed to what some had speculated would be a near-total ban on crypto activities in the country.

Moscow plans to establish its digital rouble, but after years of claiming that cryptocurrencies could be used for money laundering or to fund terrorist activities, the Kremlin has only recently supported their use.

Other central bank officials warned last year that cryptocurrencies had no place in the Russian financial industry, citing the growing quantity of crypto transactions as a threat to financial stability.

The El Salvador & Central African Republic are two countries where cryptos are already considered legal tender. Paraguay and Venezuela are two other countries that can be next to adopt cryptos as legal tender. Increasing inflation has been one of the prime reasons countries adopt cryptos, as cryptos can act as a hedge against rising inflation.

Decreasing Market capitalization of cryptos

Meanwhile, the cryptos market cap has continuously been eroding and has decreased by 58 % from its top. It was highest in November at $ 2.09 trillion, but it has come down to $ 1.223 trillion. These are the same levels as seen in July 2021. It has decreased by 8 % in the last week.

Global total market cap of crypto currencies Source: trading view
Global total market cap of crypto currencies Source: trading view

Bitcoin has been trading at $29,000, down 7.5 % from its weekly top. Ether has been trading at $ 1,932, down by 9.65 % from the weekly top. All other altcoins are trading lower as well.