Russia Opens Door to Major Bitcoin Investments Through New Legal Framework

The Bank of Russia has proposed allowing large investors to directly purchase and trade cryptocurrencies in significant volumes. This change in Russian cryptocurrency policy, developed under presidential instructions, creates a legal pathway for substantial institutional investment in digital assets over a three-year experimental period.

Under the plan, only "specially qualified investors" would be permitted to make cryptocurrency transactions within this experimental framework. This new status would be available to citizens with investments in securities and deposits exceeding 100 million rubles or those with annual income over 50 million rubles.

Financial institutions currently classified as qualified investors would also be eligible to participate. These include banks, insurance companies, brokers, trust managers, non-state pension funds, and investment fund management companies.

Financial institutions will be able to make cryptocurrency purchases under new regulatory requirements tailored to these digital assets. This represents a change from the Central Bank's previous position, potentially bringing new capital into the cryptocurrency market through Russian institutional investors with significant financial resources.

The policy shift aligns with President Putin's comments from several months ago when he stated: "Who can ban Bitcoin, for example? No one. What about the use of other electronic payment methods? [...] These are new technologies, and whatever happens to the dollar, these instruments will develop one way or another, because everyone will strive to reduce costs and improve reliability."

Bitcoin is likely to be the primary focus of these investments due to its status as the most established and truly decentralized cryptocurrency. Large investors typically prefer Bitcoin for substantial positions because of its market dominance, liquidity, and lack of central controlling authority.

The Bank of Russia also proposes allowing all qualified investors outside the experimental framework to invest in:

• Settlement derivative financial instruments
• Securities
• Digital financial assets linked to cryptocurrency values without actual cryptocurrency delivery

The Bank of Russia continues to reject cryptocurrency as a payment method. It proposes banning settlements between residents using cryptocurrency outside the experimental framework and establishing penalties for violations.

This development expands cryptocurrency access in Russia, where citizens could previously only purchase through foreign exchanges with limitations. The creation of a domestic framework for cryptocurrency purchases opens a pathway for institutional capital to enter the market, with Bitcoin likely being the primary beneficiary due to its decentralized nature and established market position.

This policy shift comes as global Bitcoin holdings by nations continue to grow. China reportedly holds approximately 194,000 BTC while the United States maintains 112,189 BTC worth about $10 billion. The recent US executive order establishing a Strategic Bitcoin Reserve and National Digital Asset Stockpile signals increased government recognition of Bitcoin's strategic importance due to its fixed supply.

Since September 1 last year, the Central Bank has been running an experiment allowing foreign trade participants to settle in cryptocurrency under a special law. This framework permits the Central Bank to establish digital currency trading rules and create a cryptocurrency settlement operator based on the National Payment System.