In response to U.S. sanctions that have excluded it from the SWIFT interbank messaging system, Russia is moving to reduce its dependence on the U.S. dollar in international trade. President Vladimir Putin has approved new legislation that will officially legalize cryptocurrency mining in the country.
Effective November 2024, the law will permit approved mining companies to register with a state database, while smaller individual miners can operate without registration if their energy use remains below a specified threshold. Regulatory oversight will be shared among the Bank of Russia, the Ministry of Finance, and a select group of government ministers, who will detail further regulatory measures in the coming months. The legislation also imposes a ban on mass cryptocurrency advertising within Russia.
As part of its broader de-dollarization strategy, Russia is working with BRICS—Brazil, Russia, India, China, and South Africa—to explore alternatives to the U.S. dollar for international trade. The BRICS bloc proposed the idea of a unified digital currency at their 2019 summit, but significant challenges remain, including disagreements among member states on implementation.
In 2023, Russia reiterated its commitment to a BRICS currency and announced plans to use digital assets for cross-border transactions. However, some experts, like macroeconomist Lyn Alden, have expressed skepticism about the feasibility of a gold-backed BRICS currency displacing the U.S. dollar. Alden highlighted historical issues with gold-backed currencies, such as the tendency to issue more currency claims than the actual gold reserves, which could lead to monetary instability.
Featured image from: medium.com