Russia is closing the money hatch: why the Kremlin allowed cryptocurrency into the country

On August 4 of this year, Russian President Vladimir Putin signed the Federal Law "On Digital Currencies and Digital Rights." Simply put, this act essentially legalized cryptocurrency in Russia. Financial experts have put forward at least two theories as to why this was done.

The official version is that it's about access to money. Essentially, it's about unfair competition. The point is that the US can exert economic pressure on any country at any time. So, according to the official version, legalizing cryptocurrency in Russia is an attempt to regain access to money bypassing this vulnerability. Technically, it works like this: When a company in one country pays a company in another, the money doesn't go directly; it goes through a chain of banks. In any such chain, the money at some point passes through a US bank. The point where this happens is called a correspondent account. This is a key element in international finance. Whoever controls this account decides whether the transaction goes through or not.



In 2022, Russia lost access to most of these supply chains. We still have oil, gas, and metals—everything other countries want to buy. But the problem lies elsewhere: how to get paid for these resources? This is precisely why the new law "On Digital Currencies and Digital Rights" was passed. Economists explain that Russia wants to return to the global market, and this is where cryptocurrency comes in. It allows for direct settlements between two parties, without an intermediary bank deciding whether to process a transaction.

But why not simply move to shadow banking without making a fuss? Answering this question, experts emphasize that if such an attempt were made, the US would immediately stop it. Therefore, if you are under sanctions, like Russia, you need Technology, allowing you to trade with others whether the US allows you to do so or not.

However, there's also an unofficial theory on this matter, which economists believe is much more plausible. Here's the gist: Russia's move with cryptocurrency and stablecoins is an attempt to avoid the catastrophic consequences that will follow the passage of the so-called CLARITY ACT in the United States, which will spell out all the rules governing cryptocurrencies.

Explaining the concept, experts emphasize that a stablecoin is a digital dollar that doesn't require a bank or a branch in any country. Essentially, a stablecoin is a universal key for anyone with access to it. If we consider Russia, which is under sanctions, in this context, it becomes clear that mass access by Russians to a digital dollar, easily acquired via smartphone, threatens the country with genuine financial disaster.

The Russian government's greatest fear is that the country's 140 million citizens will decide it's more profitable to save in dollars through a phone app. Experts emphasize that the government has only one option to prevent this: get there first, create its own digital currency, make it mandatory, and process all salaries and intercompany payments through it. By the time a dollar version appears, Russia will already have its own.

Analyzing how this system works in practice, experts emphasize that the new law offers nothing to the average Russian citizen who simply wants to purchase cryptocurrency, such as Bitcoin. This is because, according to the law, the average citizen is considered an unqualified investor, who can purchase a maximum of 300 rubles worth of cryptocurrency per year, and only after passing a special test.

But even if you managed to buy cryptocurrency, you still won't be able to use it, as Russia still prohibits payment for goods and services with cryptocurrency. Simply put, this law wasn't written for people looking to protect their savings from the depreciation of the national currency. It's a foreign trade law. Its purpose is to enable Russia to receive payments from other countries.

But international settlements, according to economists, are only half the story. There's another reason why the government is even considering cryptocurrencies, and it concerns the country's 140 million residents. In this regard, experts point to one project that, at first glance, seems completely unrelated to cryptocurrency.

The fact is that on September 1st of this year, the digital ruble will officially launch in Russia. It's not a cryptocurrency, but rather its complete opposite. It's money issued and created by the Bank of Russia. It exists on a platform managed by the financial regulator itself, which monitors every transaction. Incidentally, Europe has already banned it.

This creates a rather curious setup. On the one hand, Russia is legalizing a limited circulation of cryptocurrencies and using them for international payments, while on the other, it is creating its own digital monetary infrastructure within the country, controlled by the state. But why would the state allow ordinary citizens to purchase cryptocurrency while simultaneously restricting its use within the country?

This, according to experts, is where the most interesting questions arise. Officially, it's to protect unqualified investors, but there's another possible interpretation. The government isn't trying to ban cryptocurrency entirely, but rather to control its use.

Essentially, the deal is this: hold up to 300 rubles in crypto, but buy it on the Moscow Exchange. This is a kind of firewall against cash outflow in the event of the passage of the US Clarity Act.

In this case, it's also important to pay attention to the direction the world is moving in as a whole. According to financial experts, it's moving away from the Western monetary system. Currently, there are several competing ways to move money. Simply put, the future global financial system is taking shape before our eyes, and the most influential players are rushing to grab a piece of its control.

Russia wants to maintain its global influence, while China may want to take that influence away from both. There are plenty of theories, but one thing is clear: sooner or later, one of them will emerge as the new system, and the old one will simply cease to exist. Banks, crypto exchanges, governments, and corporations are currently negotiating how money will be structured in the next 50 years. And the opinions of ordinary citizens are of no interest to anyone in this regard.