Mining has been officially legalized in Russia, while the U.S. is preparing to become the crypto capital of the world. What’s going on between the two countries in the crypto arena?
On Aug. 8, Russian President Vladimir Putin signed a law allowing the legalization of crypto mining. Except for specific paragraphs, the document will come into force on Nov. 1. In addition, the president signed a law allowing foreign trade settlements and exchange trading in crypto as experimental legal regimes from Sep. 1.
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What does this mean for the industry?
The emergence of the law will lead to new major crypto players, and the old ones will have the opportunity to legalize income by working officially. There is an absence of understanding of the specific conditions miners encounter that create particular turbulence.
However, the development of mining can positively affect the inflow of investments into highly developed sectors of the Russian economy. In addition, with the law on crypto mining, Russia is officially joining the race of industry leaders.
The U.S. is closely monitoring Russia’s attempts to use cryptocurrencies
Amid the tightening of sanctions since 2022, Russian businesses are experiencing severe problems with payments for foreign trade transactions. In this regard, the country has raised the issue of using digital currencies.
In 2023, the Central Bank Chair, Elvira Nabiullina, allowed the use of cryptocurrency in external settlements as an experiment. In March 2024, Putin signed a law on using digital financial assets.
According to Bloomberg, two large Russian metallurgical companies began using the Tether (USDT) stablecoin and some other cryptocurrencies for settlements, mainly with Chinese clients and suppliers, at the end of May:
That large Russian firms are now turning to blockchain two years after the start of the February 2022 invasion of Ukraine underscores the lasting effect international restrictions in response to the war have had on the economy.
Commenting on the development of the digital asset industry in Russia, Treasury Secretary Janet Yellen said that the United States is monitoring Russia’s attempts to pay with cryptocurrency as traditional settlements become more complicated due to tightening Western sanctions.
She noted that the U.S. does not think Russia is actively using cryptocurrencies, but this is becoming a cause for concern as American sanctions increase.
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The U.S. tightens regulations, crypto community waits for Trump
The current administration of U.S. president Joe Biden has been known for its intolerance towards the crypto industry until recently. Thus, during Biden’s presidential term, the Securities and Exchange Commission applied harsh measures against crypto companies in the context of numerous lawsuits.
However, against the backdrop of the growing importance of the crypto community and the approaching U.S. presidential elections, politicians have dramatically changed their attitude towards crypto.
Presidential candidate Donald Trump realized this earlier. Still, in one of his speeches back in March, he declared his full support for the crypto industry. Therefore, if Trump keeps his campaign promises, the U.S. could see a boom in digital assets if he wins.
How the U.S. is joining the crypto race?
If he comes to power, Trump promises to make the U.S. the “crypto capital” of the world. He contrasted the Republican Party’s growing support for crypto with the “hard-line approach” to regulation that he says is typical of the Biden’s administration.
“If Bitcoin is going to the Moon — as we say — it’s going to the Moon, I want America to be the nation that leads the way.”
The politician also promised to destroy Biden and Vice President Kamala Harris’ anti-crypto crusade, as well as fire the SEC chair “on day one” after taking office.
Trump’s speech was a 180-degree turn after publicly criticizing Bitcoin (BTC) during his presidency. In 2019, he said he was not a fan of Bitcoin and other cryptocurrencies, also calling BTC a scam. He explained his hostility towards cryptocurrency by pointing out that it competes with the dollar.
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Russia and the U.S. continue to compete in new areas
The beginning of the race between countries goes back to World War II, after which the Cold War and nuclear arms race began.
Another rivalry between the U.S. and Russia (USSR back then) has turned out to be in space. The first man into outer space was the Soviet, Yuri Gagarin. And the first man to walk on the Moon — American, Neil Armstrong.
In the 1990s, Russia became the successor to the USSR, and the rivalry between the two countries continued, mainly in weapons.
With the development of the crypto industry, another area of confrontation between the U.S. and Russia appears. However, both countries are still on the way to becoming crypto-friendly jurisdictions.
1960s: USA vs USSR – space race on who will reach the moon first.
2020s: USA vs Russia – crypto race on who will take #Bitcoin to the moon first.
Like ISRO & Chandrayaan in the space race, India has the opportunity to overcome current odds, innovate, and become a world leader… pic.twitter.com/JkRlAhdv2Z
— Sumit Gupta (CoinDCX) (@smtgpt) July 30, 2024
In America, crypto is legal and recognized as a freely convertible currency. Companies that provide Bitcoin exchange services or process crypto transactions are also within the legal field. However, they are still under pressure due to insufficiently clear regulations.
In Russia, despite the fact that Russians are active users of crypto, mining, and digital assets, these have not been legalized until recently. There is a law in Russia that allows crypto to be interpreted as a type of digital currency, prohibits its use in Russia to pay for goods and services, but allows its use as an investment object.
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Who will win?
The U.S. and Russia are paying more attention to cryptocurrencies for different reasons. If, in America, the authorities’ interest is fueled by the upcoming elections and the fight for votes, then in Russia, cryptocurrency is becoming more of a necessary tool against the backdrop of sanctions and the search for opportunities to replenish the budget.
One way or another, both countries still need to reach a final victory in the crypto race: both the U.S. and Russia are faced with a lack of sufficient regulation of this industry.
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