Russia Bans Digital Payments As Economy Struggles With Sanctions

Russian President Vladimir Putin has signed into law a ban on all digital payments as the economy struggles under the weight of economic sanctions following its invasion of Ukraine.

The law banning digital payments was approved by the Russian Parliament on July 8 and signed into law by Putin this past weekend (July 16 and 17).

The ban applies to the use of digital securities and utility tokens as a means of payment for goods, services, and products in Russia. It builds on a previous digital asset law drafted in 2020 that banned cryptocurrencies from being used in payments.

In February, Russia's Ministry of Finance introduced a bill in Parliament that would regulate cryptocurrencies in the country. However, that legislation ran counter to the Bank of Russia, which has pushed for all cryptocurrency activity to be banned in the country, citing extreme volatility and risk.

The latest ban comes as a bit of a surprise as widespread media reports have claimed that Russia was using cryptocurrencies to help it evade economic sanctions imposed by western nations following its invasion of Ukraine.

Some analysts speculated over the weekend that the ban on digital payments may have been prompted by the sharp decline in the prices of cryptocurrencies and digital assets.

The price Bitcoin (BTC), the largest cryptocurrency, is currently trading at $22,000 U.S., down nearly 70% from a peak of $68,000 U.S. reached last fall.