What’s behind Putin’s digital-asset payments ban?

On July 16, Russian President Vladimir Putin signed a law that bans the use of digital assets like NFTs and cryptocurrencies to pay for goods and services within the country. It is still legal to trade, buy, and sell those assets.

Why should we care?
The new rules feature key loopholes that reveal how the Kremlin considers digital assets both a potent threat as well as a useful monetary tool. By banning the use of digital assets within the country, the Russian government hopes to maintain its ability to regulate its domestic market by sustaining use of—and demand for—the ruble. But the new law allows foreign payments coming into Russia to be made in the form of digital assets. It’s a way for the government to work around sanctions, and potentially trade those assets for other fiat currencies with allied countries. Due to the ongoing Russian invasion of Ukraine and the sanctions imposed by allies of Ukraine, Russia missed a loan payment this year: the first time it’s done so since 1998. As a result, the Kremlin hopes to maintain a firm hold on the country’s economic conditions without abandoning crypto’s potential benefits.