Russia approves crypto bill in first reading! Cross-border settlements in cryptocurrency permitted, but domestic payments remain strictly prohibited.

The State Duma of Russia approved a cryptocurrency regulation bill in the first reading in April 2026, permitting businesses to use digital assets for cross-border trade settlements while maintaining a strict ban on domestic crypto payments. The Central Bank of Russia (CBR) will serve as the primary regulator, exercising full control over crypto platform licensing and transaction monitoring. Against the backdrop of the EU's 20th round of sanctions, which comprehensively block Russia's crypto industry, this move marks Moscow's latest attempt to seek sanction-evasion channels. (Context: EU imposes its largest sanctions on Russia in two years: comprehensive ban on crypto platforms, with A7A5 stablecoins and the digital ruble added to the blacklist.) (Background: Putin signs new law! Authorizing Russian courts to confiscate cryptocurrencies during criminal investigations.) Russia is building a highly regulated digital asset system, but this does not constitute full legalization of cryptocurrency. The overall goal of officials is to establish a system capable of facilitating international trade payments while limiting the role of digital assets in domestic circulation. The core of Russia's crypto regulatory model is to position digital assets as a geopolitical strategic tool rather than conventional financial assets. Regulators do not view digital currencies as a substitute for the ruble, but rather delineate limited application scenarios specifically for foreign economic activities. Unlike other countries that are actively expanding retail crypto services, Russia prioritizes structural, institutional-level applications linked to cross-border trade. Under this framework, cryptocurrency is seen as a means to enhance the resilience of the payment system, rather than an engine for financial innovation. In fact, as early as 2024, Russia allowed limited foreign trade crypto settlements through experimental mechanisms while continuing to ban domestic crypto payments. This bill marks a key step from experimentation to formal legislation. The first-reading bill approved by the State Duma in April 2026 covers rules for cryptocurrency circulation, qualification standards for market participants, and the division of responsibilities among regulatory bodies. The most core feature of the bill is centralized regulatory control. The Central Bank of Russia (CBR) is positioned as the primary regulator, responsible for issuing operator licenses, transaction monitoring, and compliance enforcement. The system emphasizes regulated participation through licensed intermediaries rather than an open or decentralized operating model. At the same time, Russian authorities maintain clear boundaries regarding domestic use. The ruble remains the only legal tender within Russia, and cryptocurrency may not be used for daily transactions between individuals and businesses. The CBR has repeatedly warned that allowing digital assets for domestic payments could undermine monetary stability and regulatory efficiency. This reflects Moscow's deliberate design to separate domestic economic activities from external settlement channels. The most notable provision in the bill is the authorization to use digital assets for settling foreign trade transactions. Businesses engaged in cross-border operations will be permitted to make contract payments in cryptocurrency, especially when traditional payment channels are obstructed. The direct context for this move is pressure from Western sanctions. Since 2024, banks in several major trading partner countries have become more cautious about processing Russian transactions due to the risk of secondary sanctions. Russian officials later acknowledged that alternative settlement methods (including cryptocurrency) have already been practically adopted in international payments. According to the bill's design, cross-border crypto settlements will be executed by a series of licensed operators, who must obtain licenses from the CBR and be subject to regulation. Operators are responsible for Know Your Customer (KYC) procedures, transaction record storage, and Anti-Money Laundering (AML) reporting obligations. All transactions must pass through regulated licensed entities, and peer-to-peer cross-border crypto transfers between individuals are prohibited. It is worth noting that Russian authorities firmly reject incorporating cryptocurrency into the domestic payment system. The bill explicitly stipulates that cryptocurrency may not be used to pay for goods, services, or any domestic debts. CBR Governor Elvira Nabiullina has clearly stated that the potential threat of digital currencies to domestic monetary policy outweighs their convenience. Under her leadership, the CBR remains highly vigilant against any financial innovation that could weaken the status of the ruble. This stance is also reflected in Russia's attitude toward Central Bank Digital Currencies (CBDC). Unlike other BRICS countries that are actively testing cross-border CBDCs, Russia's Digital Ruble project currently focuses primarily on domestic wholesale payment scenarios rather than being promoted as a tool for sanction evasion. Although the bill opens the door for Russian companies to conduct crypto cross-border settlements, significant questions remain regarding its practical effectiveness in the face of international sanctions. Western regulators are closely monitoring Russia's crypto foreign trade moves, especially transactions involving sanctioned entities or financial intermediaries. The widespread use of cryptocurrency in foreign trade will continue to face close scrutiny from Western authorities. Exchanges, custodians, and payment intermediaries may still be subject to sanctions reviews, reporting obligations, or restrictions by foreign authorities. Practical operations of using cryptocurrency for trade settlement also face limitations such as insufficient liquidity, custody requirements, transaction monitoring,