Is cryptocurrency adoption growing in Russia? What is the current outlook?

After focusing on Latin America and Asia for a while, today, we turn our attention to the vast and formidable nation of Russia, a land that gave birth to historical figures like Tsar Peter, founder of iconic St. Petersburg, and Catherine the Great. This country played a pivotal role in the events of the 20th century that shaped our modern world.

Despite having complex and ambiguous regulations, Russia has emerged as one of the leading countries in crypto adoption. In 2021, the nation ranked 18th on the Chainalysis Global Adoption Index, and by 2023, it had risen to 13th place. The country boasts a growing number of people turning to technologies like Bitcoin and Ethereum to bypass the traditional financial system, with Western economic sanctions also contributing to this trend.

A poll by the All-Russian Center for the Study of Public Opinion (VTsIOM), which included around 1,800 users aged 18 and over, revealed that 9 out of 10 people are familiar with crypto. This impressive 86% figure underscores the growing interest in cryptocurrencies in Russia. Although banks don’t yet offer Bitcoin-related products and crypto cannot be used for public services, there is a noticeable increase in citizen engagement with the field.

It’s important to remember that time can unlock even the most restrictive scenarios. What seems unlikely today might change in just a few months or years. A recent example is the approval of a new project to legalize crypto mining in Russia. The law, set to take effect next November, will enable companies registered in a state database to operate freely.

“Legal entities and individual companies will be allowed to work as mining infrastructure operators once they are listed in the state registry”.

Here are some key details about the upcoming law. Individual miners will be allowed to operate without registering with the government, as long as they keep their energy consumption below a specified limit. However, they will need to trade their profits exclusively on approved domestic platforms. Additionally, the monetary authority will have the power to restrict profit accumulation if it considers it a threat to Russia’s financial stability. Oversight of the mining sector will be managed by the Ministry of Finance, the Central Bank of Russia, and other appointed officials, who will establish further guidelines in the coming months.

In mid-July, President Putin emphasized the need to accelerate the integration of digital assets and the central bank digital currency (CBDC) into the Russian economy. He revealed that over 30,000 transactions had been completed during the CBDC pilot phase. According to TASS, Russia’s main state news agency, Putin elaborated:

“It is important for Russia to ‘seize the moment’, as they say, to create the legal framework and regulation promptly, to develop infrastructure, to create conditions for the circulation of digital assets, both within the country and in relations with foreign partners.

Now we need to take the next step, namely to move to a broader, full-scale implementation of the digital ruble in the economy, in economic activity and in the field of finance”.

Do the recent pro-mining law and President Putin’s statements guarantee success and a bright future for Russia’s crypto industry? Not necessarily. Look at Venezuela: despite many strategies and legal frameworks, the outcomes haven’t been encouraging. Still, Russia is a country that crypto enthusiasts should watch closely. We’ll keep an eye on how things progress and, as always, keep you informed.

Other noteworthy details about crypto adoption in Russia:

• According to CoinATMRadar, Russia has 74 Bitcoin ATMs across 29 cities, with 24 located in the capital, Moscow.

• In early August, Alexander Ilyukhin, Russian ambassador to El Salvador, revealed that the country had invited Russia to begin trading in crypto.

• According to Cambridge University data, Russia contributes the third-highest hash rate to the Bitcoin network, with a 4.66% share.

• Last July, Anatoly Aksakov, head of the State Duma’s Financial Markets Committee, announced that Russia aims to start international payments in digital rubles by the second half of 2025.

• In 2022, Bloomberg reported that Russian crypto traders held cryptocurrency worth over 16.5 million rubles, which was equivalent to more than 200 million dollars at the time. Currently, this value is just over 180 million dollars.

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