Regulation May Drive Cryptocurrency Deeper into Shadows in Russia

The Russian government's attempt to regulate cryptocurrency may have an unexpected consequence: pushing some market participants further into the shadows. Eduard Kolozhvari, head of the Higher School of Business at NSUEM, warns that a new framework allowing citizens to work with cryptocurrency through state-controlled platforms could lead to more closed schemes.

The Bank of Russia has softened its approach, allowing citizens to trade on state-controlled exchanges with volume restrictions. However, for those who used cryptocurrencies as an alternative payment method, the new framework may prove too rigid.

Kolozhvari notes that central banks worldwide are trying to curb illegal money circulation and control cryptocurrency. The problem is regulating its payment function in informal settlements, which becomes more difficult when official controls tighten.

The main part of the Russian law on digital currencies and digital rights will come into force on September 1, while separate provisions will become effective in 2027. Bitcoin, Ethereum, and Tether USDT are now available for public trading on exchanges listed by the Bank of Russia.