Russia passes crypto law, permits foreign trade to bypass sanctions

Russia’s State Duma has passed legislation establishing the country’s first comprehensive framework for cryptocurrency, with the vast majority of provisions taking effect on September 1. The law formally creates a regulated market for digital asset exchanges, depositories, and service providers. Crucially for investors, it grants judicial protection to holders of digital currencies regardless of whether those assets were previously declared.

The new framework distinguishes sharply between retail and institutional market participants. Retail investors are restricted to purchasing the most liquid cryptocurrencies, subject to an annual investment cap of roughly $3,800 per licensed intermediary. Qualified investors face no such restrictions. Only entities included in a new official registry will be permitted to operate as cryptocurrency exchanges. However, the legislation includes a transition period, allowing unregistered firms to continue operating legally until July 1, 2027.

To enforce this monopoly, the law requires traditional banks to refuse transfers if they suspect the funds are moving to or from an unauthorized digital asset provider.

For corporate finance and international markets, the legislation’s most significant measure is the formal legalization of digital currencies for foreign trade settlements. By permitting Russian residents to use crypto to pay non-residents under trade contracts, the Kremlin is establishing a legal mechanism to bypass global financial restrictions. The law also regulates crypto mining and allows settlements involving mined tokens.

Despite opening the door for international crypto settlements, the legislation maintains Russia's strict domestic prohibition. Citizens and businesses remain barred from using cryptocurrencies to purchase everyday goods and services within the country. Additionally, the law explicitly bans banks and other financial institutions from advertising or promoting crypto payments to the domestic market.

The new law arrives as Western regulators attempt to tighten the screws on Moscow's digital finance avenues. In April, the European Union rolled out a severe sanctions package that included a complete ban on crypto providers and platforms established in Russia.

“Russia is becoming increasingly reliant on cryptocurrencies for international transactions,” the EU said at the time. By creating a legal sanctuary for digital asset exchanges and institutional foreign trade settlements, Moscow is moving to structurally embed cryptocurrency into its sanctioned economy.