Russia Draws Up Plans To Allow Overseas Crypto Mining To Settle International Trade

Russia is looking into the possibility of using cryptocurrencies and allowing foreign crypto mining for international settlements as it explores ways to evade sanctions imposed on it for its invasion of Ukraine last year.

The collective West has targeted Russia's economy with brutal sanctions over the war, which President Vladimir Putin calls a "special military operation." The Kremlin has tried to evade the sanctions, aimed at isolating its economy, using cryptocurrency and blockchain technology.

Earlier this week, a local media report said that Russia's central bank is planning to allow the creation of crypto-mining organizations outside the country.

Bank of Russia Governor Elvira Nabiullina said that Russian entities will be permitted to create specially authorized organizations for crypto mining but the scope of allowed activities is still unclear since it is still being discussed.

The new rules would reportedly allow companies with ties to the state to engage in crypto mining activities, with private companies getting approval to do the same at a much later date, the report said.

"We adhere to the same position that within the country, cryptocurrency ... should not be used, [but] for external settlements, we assume that this is possible in the form of an experiment," Nabiullina noted.

Russia's Central Bank has taken a stance against the domestic use of cryptocurrencies, but as earlier mentioned by its governor, the plans involving crypto are just an experiment for external payments or settlements.

Aside from crypto mining, the Bank of Russia's governor also mentioned that the country is currently working on a draft law to allow the use of crypto in international trade settlements.

Consultation on the creation of these institutions has already started, with the government reportedly eyeing to create institutions to mine crypto and oversee its use in transacting business with foreign entities.

Last March, Russia's Duma Committee on Energy chairman Pavel Navalny hinted at the country's plan to allow crypto for international settlements when he mentioned the country's willingness to settle oil and gas trades with "friendly countries" in Bitcoin.

"We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan. With Turkey, it will be lira and rubles. You can also trade bitcoins," the chairman said, based on the translated comments from a videotaped conference in March 2022.