Russia's Crypto Assets War: How do "Crypto Assets Exchanges" support the underground economy under payment bans?

Starting from 2026, Russian authorities will impose fines for payment behaviors involving Crypto Assets. According to a new law, using digital coins as a means of payment in the country will not only face fines, but the involved assets will also be confiscated. This strict measure reflects the Russian government's resolute crackdown on Crypto Assets payments. However, under the official high-pressure policy, there remains a complex ecosystem in the Russian Crypto Assets market, particularly the key role played by "Crypto Assets exchanges," which deserves in-depth exploration.

1. Russia's Crypto Assets Payment Ban and Penalties

Local media reports indicate that starting from 2026, payments made with decentralized digital currencies (such as Bitcoin) will result in hefty fines for Russian citizens and businesses. Anatoly Aksakov, head of the Chamber of Commerce's Financial Market Committee, revealed the government's plans to Izvestia. He stated that representatives will consider a bill to propose fines this autumn, in order to clarify responsibilities in the current gray area.

According to the legislation drafted jointly by the Bank of Russia and the Ministry of Finance, individuals making payments with Crypto Assets will face fines of 100,000-200,000 rubles (over $2,500), while companies will be fined between 700,000 and 1 million rubles (almost $13,000). The newspaper pointed out that it also stipulates the confiscation of illegal use of coins. In April, the executive authority in Moscow approved amendments that legalized the confiscation of Crypto Assets by recognizing them as property in criminal proceedings. Since January 1 this year, Crypto Assets have also been regarded as property in tax law, regulating the taxation of related activities, such as mining legalized in 2024 and trading permitted under limited circumstances. The Central Bank of Russia (CBR) announced the exact amounts of monetary fines, but it is still unclear when they will be enforced.

2. The "use cases" of Russian Crypto Assets and the role of "Crypto Asset Exchange".

The Russian monetary authorities have been a staunch opponent of the legalization of domestic Crypto Assets and insist that the Ruble (including its digital form) should be the only legal tender. At the same time, it also agrees to supervise the "Experimental Legal Regime" (ELR), promoting the settlement of Crypto Asset exchanges and foreign trade to help Russian enterprises bypass Western sanctions.

Since the implementation of the "Digital Financial Assets" law (DFAS) in 2021, Russia has been using Crypto Assets to pay for expenses. Nevertheless, Russians are still spending digital coins, with such transactions increasing by 2.5 times in the first year of the war in Ukraine that began in 2022.

These use cases include not only transferring funds abroad and circumventing financial restrictions but also paying employee salaries, such as developers relocating to other countries. Last week, Izvestia cited warnings from labor authorities that salaries in Crypto Assets would also incur hefty fines for companies.

Information security expert Alexey Gorelkin told the publication that Crypto Assets payments are often associated with informal employment. He elaborated, "For Russian citizens working remotely for companies outside of Russia, this is a common choice. At the same time, Russian companies rarely work directly with Crypto Assets, preferring to use them as an additional incentive, as property incentives rather than as wages."

In this context, crypto assets exchanges play a key role. Various services and Telegram bots handling crypto payments (including via QR codes) are also popular in Russia. Estimates suggest that up to 400 continued to operate two years after the implementation of the coin payment ban. These crypto assets exchanges, often existing in informal or semi-public forms, provide individuals and businesses with a channel to exchange fiat currency for crypto assets, or to exchange crypto assets for fiat currency, thereby bypassing the official financial system. Their existence allows crypto assets to circulate and be used to some extent in Russia, despite being banned for payments.

3. Illegal Mining and Surge in GPU Demand

The demand for video cards used for Crypto Assets mining in Russia has significantly increased this year, as higher Crypto Assets prices in certain regions and low electricity rates have stimulated illegal coin mining activities. According to observers interviewed by local media, it is expected that the financial losses caused by compensations registered by Russian authorities will exceed 10 billion rubles this year.

According to an article published on Friday by the Russian daily Izvestia, the so-called "black mining" is one of the most common Crypto Assets crimes in the country, with many regions struggling to cope with its consequences. Both "black miners" and "gray miners" that steal energy require powerful chips. Therefore, the newspaper revealed that their sales nearly doubled in the first half of 2025.

M.Video-Eldorado is Russia's leading consumer electronics retailer, stating that demand for GPUs in its stores has increased by 233% in terms of sales revenue and units sold during the mentioned period. The company is also a major e-commerce operator, attributing the peak to increased interest in gaming and AI applications. Miners have also contributed, IT expert Daniil Arzhakov firmly believes. He pointed out that a stronger Russian ruble has made video cards cheaper and more effective in the domestic market.

Vadim Kovalenko, a lecturer in the eSports department at Synergy University, stated that the increase in graphics card sales indicates sales related to illegal mining. He warned that this trend could lead to an energy crisis and escalate the scale of shadow enterprises. The Russian government has been working in this direction at both federal and local levels. Currently, a ban is in place, where the North Caucasus region is thriving in Dagestan, Ingushetia, and Karachay-Cherkessia.

The ban on coin mining in data centers is progressing in parliament to preserve its capacity for AI development and to propose remote disconnection or even legal remote connections for encryption farms to limit consumption during peak hours is also being considered. Igor Bederov, founder of the Russian company Internet Search, commented: "Black mining is an activity carried out in many regions of the Russian Federation. The Caucasus still has a number of black miners, those who engage in power theft."

Analysts from the Stolypin Institute for Economic Growth stated that the losses caused by illegal mining facilities last year were approximately 10 billion rubles (over 125 million dollars). They have not yet released estimates for this year, and the losses may exceed the previous total.

IV. The Contradiction of Legalization and Regulation

Russia will legalize crypto assets such as Bitcoin in 2024. Companies and individual entrepreneurs operating in the industry must register with the Russian tax authority. If a private individual uses less than 6,000 kilowatt-hours of power per month, mining can be conducted without registration. Failing to register when exceeding this limit will soon result in fines and coin confiscation.

This shows the contradictory attitude of the Russian government towards Crypto Assets: on one hand, it attempts to control its application in the payment sector through strict bans, while on the other hand, it is legalizing and regulating taxation in specific areas such as mining. This strategy of "suppressing while regulating" complicates the survival space of Crypto Assets exchanges, which navigate between legality and illegality, becoming a buffer zone between market demand and government control.

Conclusion:

The development of Crypto Assets in Russia presents a complex and contradictory situation. Strict payment bans and hefty fines aim to curb the circulation of Crypto Assets domestically. However, market demand, the need to evade sanctions, and rampant illegal mining activities provide a survival space for Crypto Assets in Russia. Against this backdrop, Crypto Assets exchanges, as a bridge connecting the encryption world with the fiat currency world, will continue to attract attention regarding their existence and operational models. How the Russian government balances the crackdown on illegal activities with the regulation of legitimate applications will be key to the future development of its Crypto Assets policy.