Putin Acknowledges Bitcoin’s Resilience as Russia Advances Crypto Regulations
Russian President Vladimir Putin has recognized Bitcoin's resilience, asserting it cannot be banned. This acknowledgment underscores cryptocurrency's potential as Russia faces economic sanctions. At a Moscow forum, Putin highlighted Bitcoin's decentralized nature, describing it as immune to external control and a prime example of next-generation payment systems.
Putin criticized dependence on traditional currencies like the US dollar, citing risks of political confiscation. Following the freezing of $300 billion in Russian reserves by Western countries in 2022 after the Ukraine conflict began, he advocated for reallocating reserves into domestic investments instead of foreign assets. He emphasized the need for adopting new payment technologies to reduce costs and improve transaction reliability.
Russia has implemented significant reforms in its cryptocurrency regulations. Crypto transactions are now exempt from value-added tax (VAT), while profits are subjected to a capped 15% personal income tax, akin to securities earnings. These reforms aim to provide clarity and promote the use of cryptocurrencies domestically. However, some regions, particularly occupied Ukrainian territories and parts of Siberia, face mining restrictions. Mining is banned in areas such as Donetsk, Lugansk, Zaporizhia, and Kherson, with Siberia set to introduce seasonal restrictions beginning December 2024 due to winter electricity shortages.
Putin’s government has also initiated the use of cryptocurrencies in foreign trade. A law permitting digital assets for international transactions took effect in September. However, cross-border payment regulations are still being finalized, expected to conclude by year-end. These changes reflect Russia’s increasing interest in alternative financial systems amid Western sanctions.
Additionally, Putin indicated plans for state-backed cryptocurrency exchanges, marking a strategic shift toward leveraging digital currencies. While supporting innovation, the government is tightening controls on mining in certain areas, balancing its push for crypto adoption with energy concerns.
“Who can ban Bitcoin? Nobody. Who can prohibit the use of other electronic payment methods? Nobody. These are new technologies,” Putin stated, emphasizing his supportive view of decentralized finance. With ongoing revisions to its crypto policies, Russia is positioning itself as a significant player in the global cryptocurrency market.