Could Russia Solve the Crypto Crisis?
The crypto market is in a shambles the past couple of weeks as swathes of governmental regulations give investors cold feet. After last weekend failed to reinvigorate the market, many enthusiasts will be wondering where to look for some positive news. It may be on the way…
Russia is a bit of a lone wolf as far as politics are concerned. As cryptocurrencies begin to tug at the strings of national and international affairs, the country will surely be thinking carefully about how to play its hand in regards to crypto regulation. Speculation abounded last year as Russian president Vladimir Putin met with Ethereum founder Vitarik Buterin as part of the St. Petersburg International Economic Forum. Mr. Putin allegedly “supported the idea of establishing ties with possible Russian partners,” which, though vague, sounds positive.
In addition, Dmitry Marinichev, Mr. Putin’s internet advisor, is a huge supporter of Bitcoin. Indeed, news of his huge mining operation, located in an old Soviet car factory, garnered interest last year. Russia may be an ideal location for Bitcoin mining, given the long, cold winters (great for keeping the hardware cool) and cheap electricity. People are beginning to notice. As China continues to put pressure on crypto miners in the country, many of them are starting to see Russia as an appealing alternative. According to a November 2017 report by Bitcoin News, 40 companies from China and the EU have sent applications to the Russian Association of Blockchain and Cryptocurrency (RACIB) to begin mining operations in the country.
All this being said, it is inevitable that Russia will place some regulations on cryptocurrency. Even the most financially liberal country is bound to be uncomfortable with totally unregulated flows of cash, particularly where large corporations are concerned. And Russia has certainly been very sceptical in the past, going so far as to consider jail time of up to 7 years for cryptocurrency users back in 2016. And as recently as October 2017, Russia’ central bank announced plans to restrict access to online cryptocurrency exchange websites. Despite all this, nothing concrete seems to have come to fruition yet. So what’s going on?
In recent weeks, Putin certainly seems to have come to a more level conclusion on the subject. According to Russian news agency TASS, Putin last week said that some kind of regulation will ‘definitely’ be required in future, though he acknowledged that Bitcoin et al “can be a settlement medium to a certain degree and in certain situations. This is done quickly and efficiently.”
Evidently, Russia is staying their hand on cryptocurrency regulation for the moment, and it is no coincidence that it is reportedly developing its own in the meantime. The so-called ‘cryptorouble’ being developed by the Kremlin will likely be investigated as a way to conduct global exchanges of cash while bypassing international sanctions. In addition, the Bank of Russia last year announced that it is now working with masterchain technology. Deputy Governor Olga Skorobogatova said: “We are planning to consider the use of the Masterchain prototype as a component of the new-generation financial infrastructure in the future.” This certainly suggests that the country is seeing the benefits of cryptocurrency and the innovations it comes with.
In any case, the term ‘regulation’ is getting increasingly warped within cryptocurrency circles. While it is true that market prices take steep dives every time a country introduces new legislation to control the use of Bitcoin and its rivals, it does not necessarily mean an outright ban or threat of criminal charges. Russia’s Ministry of Finance announced that it was drafting a bill to regulate, or ‘legalize’, Bitcoin trading on certain platforms last December, with Deputy Finance Minister Alexei Moiseev stating that it “supports the legalization of trade on official exchanges”, despite it not being technically illegal at the moment…
If all of this sounds extremely contradictory, that’s because it is. The Kremlin has constantly altered its stance on cryptocurrency over the past couple of years, but presently it seems as though it’s beginning to reach some kind of conclusion. Russia’s headstrong approach in world affairs may see it taking a more lax attitude to cryptocurrencies as the West mulls over tighter control. The coming months will tell.
Bitcoin currently has a market cap of $173,643,993,145 USD and is currently trading at $10,323.80 USD, down -9.68% from yesterday.
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