Russia has officially legalized Bitcoin and cryptocurrency mining, marking a significant shift in its approach to digital currencies. This move, set to take effect in November 2024, is part of a broader strategy to reduce reliance on the US dollar in international trade, particularly in response to US sanctions that block Russia from the SWIFT interbank messaging system. Under the new law, approved mining firms can register through a state database, while individual miners can operate without registration if their energy consumption stays below a certain threshold. The mining industry will be regulated by the Bank of Russia, the Ministry of Finance, and select government ministers, who will develop more detailed regulations over the coming months. Additionally, the bill includes a ban on mass cryptocurrency advertising within Russia.
This legalization aligns with Russia's growing involvement in the BRICS bloc, which includes Brazil, Russia, India, China, and South Africa. These emerging economies are actively seeking alternatives to the US dollar for international trade. The idea of a unified BRICS digital currency was first proposed in 2019, and Russia has renewed its focus on this concept in 2023. The Bank of Russia and the Russian government are working on creating special entities to use digital assets for cross-border settlements, as part of a larger push to de-dollarize their economies.
However, the ambition of a unified BRICS currency has faced criticism. Macroeconomist Lyn Alden expressed skepticism about the viability of a gold-backed BRICS currency, suggesting that it could lead to monetary debasement and potential collapse if the amount of paper currency issued exceeds the actual gold reserves. Despite these challenges, Russia's move to legalize crypto mining represents a bold step in its efforts to reshape global financial systems.
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