Russia's lower house of parliament, the State Duma, has passed a controversial bill known as the “Digital Economy National Program,” aiming to isolate the Russian segment of the internet (Runet) from the rest of the global web. The legislation, which received overwhelming support from more than two-thirds of deputies, is now headed to the Federation Council for approval before being signed into law by President Vladimir Putin.
Key Provisions and Implementation Costs
The law mandates that all internet traffic within Russia be routed through government-controlled exchange points, grants sweeping powers to telecom watchdog Roskomnadzor to disconnect non-compliant providers, and establishes a national Domain Name System (DNS). The goal is to ensure that data transfers between Russian citizens and organizations stay within the country, reducing reliance on international infrastructure that could be vulnerable to foreign sanctions or cyberattacks. The law is scheduled to take effect in November 2019, with rules for Russian domains and cryptographic protection coming into force on January 1, 2021. However, implementation costs are estimated at over 30 billion rubles (approximately $500 million), with annual maintenance reaching 134 billion rubles (over $2 billion). These expenses are likely to be passed on to telecom operators and ultimately to consumers, leading to higher internet prices and potential slowdowns due to mandatory filtering equipment.
Criticism and Censorship Fears
Civil liberties groups, including Roskomsvoboda, have strongly opposed the legislation. Artem Kozlyuk, the organization's leader, warned that the new rules will centralize the internet infrastructure, making it more vulnerable to attacks rather than less. “Any decentralized system is always more robust against external influences, but the bill’s sponsors do not want to realize that,” he said. Kozlyuk noted that the law gives the government control over domain names, cryptography, traffic filtering, and routing, creating economic, technical, and legal threats. Many critics have compared the system to China's “Great Firewall,” and public protests have already been held against it.
Impact on the Russian Crypto Industry
The cryptocurrency sector in Russia is expected to be particularly affected. Currently, digital assets operate in a legal gray zone, and exchanges face frequent blocking attempts by prosecutors. Kozlyuk noted that although lawyers have successfully challenged some illegal shutdowns, the new law will give authorities even more tools to restrict access. Russian developers are already looking for more favorable regulatory environments abroad. The State Duma had previously delayed a comprehensive bill on digital financial assets, but with the sovereign internet law moving forward, the outlook for crypto businesses in Russia has become even more uncertain.
If fully implemented, Runet's isolation could reshape the country's digital landscape, demanding greater compliance efforts from crypto platforms and potentially driving further capital and talent out of Russia. Roskomsvoboda and other activists are urging internet service providers to resist censorship and are encouraged by reports that many VPN services have refused to redirect traffic to Roskomnadzor.