Bitcoin Cannot Be Banned Amid Sanctions

Russian President Vladimir Putin stated publicly on Wednesday that Bitcoin is unstoppable, marking his clearest acknowledgment of cryptocurrency’s growing significance as Russia faces ongoing sanctions.

Speaking at a Moscow forum, Putin addressed the dominance of traditional currencies like the dollar while noting the emergence of next-gen payment systems. He cited Bitcoin as a prime example of a decentralized currency immune to external suppression.

Putin Is Establishing Regulatory Clarity in Russia’s Crypto Market

Putin also highlighted how new payment technologies are evolving to lower costs and boost reliability, signaling a positive stance on the cryptocurrency’s potential. He also raised concerns about holding state reserves in foreign currencies, pointing out the risks of political confiscation. 

Putin argued for channeling such reserves into domestic investments instead. Western nations froze around $300 billion of Russian reserves in 2022 after the Ukraine war began, prompting this shift in perspective.

“Who can ban Bitcoin? Nobody. Who can prohibit the use of other electronic means of payment? Nobody. Because these are new technologies,” Putin said. 

Meanwhile, Russia has introduced significant changes to its cryptocurrency regulations. The government recently revised a crypto taxation framework, exempting cryptocurrency transactions from value-added tax (VAT). 

Instead, earnings from these transactions will be taxed similarly to securities income, with a 15% personal income tax cap on crypto-related profits.

In contrast, authorities have cracked down on crypto mining in certain regions. Mining activities were banned in occupied Ukrainian territories, including Donetsk, Lugansk, Zaporizhia, and Kherson. 

Also, Siberia, known for its extensive mining operations, faces seasonal mining restrictions from December 2023 to March 2031. Some areas will see a complete mining ban starting in December 2024, with officials citing winter electricity shortages as the primary reason.

However, cryptocurrencies continue to receive wider acceptance among Putin’s government. A law permitting the use of crypto for foreign trade transactions came into effect on September 1. Full regulation of this activity is still pending. 

Putin is also reportedly planning to launch state-backed crypto exchanges. The developments underscore Russia’s growing interest in leveraging cryptocurrencies amid economic sanctions and its push for alternative financial systems.