Putin’s Take on Crypto: Balancing Innovation and Control in Russia

• Vladimir Putin plans to swiftly develop a framework to regulate crypto.
• Putin also seeks to roll out the digital ruble on a larger scale soon.
• The Russian President said that he is also working to regulate crypto mining.

Russian President Vladimir Putin has outlined the nation’s plans for digital currencies and the integration of digital technology into the financial industry. In his statement , Putin made it clear that Russia does not want to miss the opportunity to establish a robust legal framework for cryptocurrencies.

Putin emphasized the potential of digital technologies in various sectors, including trade, banking, and international relations. He asserted that Russia must promptly develop a legislative framework to regulate digital assets and build the necessary infrastructure to enable their circulation.

The President noted the significant progress Russia has made in the realm of digital assets. In August of last year, the Russian Central Bank successfully completed a pilot test of the digital ruble, a central bank digital currency (CBDC).

The pilot project, involving twelve banks, 600 individuals, and 22 businesses across eleven cities, had already processed over 27,000 transactions for goods and services, in addition to over 7,000 payments, by July 1st.

Putin then set a goal of fully implementing the digital ruble in the banking and industrial sectors of the economy. He also acknowledged the growing importance of cryptocurrencies in the financial sphere. Although they are not traditional currencies, he observed, these coins are increasingly used worldwide in international transactions.

However, he also expressed concerns about the impact of Russian crypto mining on infrastructure and the environment. The Ministry of Energy estimated that mining operations consume 16 billion kilowatt-hours annually, accounting for approximately half a percent of the nation’s total electricity usage. Low local electricity rates contribute to the continued rise in mining activity.

President Putin spoke of the potential for unchecked growth in electricity usage for cryptocurrency mining, which could lead to power shortages in certain regions, including the Trans-Baikal Territory, the Irkutsk region, and Buryatia.

To mitigate these risks, Putin said he has already ordered efforts to control digital currency mining in Russia, including taxation and tariff policies.