Ultimate Resource On Russia’s Involvement With Bitcoin
Russian Duma Prepares Bill On Cryptocurrency Taxation. The Russian State Duma will consider a new bill on cryptocurrency taxation on Feb. 17. Ultimate Resource On Russia’s Involvement With Bitcoin
Russian lawmakers are actively preparing new legislation for taxing cryptocurrencies like Bitcoin (BTC).
According to an official announcement by the Russian State Duma, the Duma’s Committee on State Building and Legislation has approved a bill on cryptocurrency taxation on Feb. 15. The new bill represents a set of amendments to the Russian federal tax code.
As part of the draft bill, the Russian government officially recognizes cryptocurrencies like Bitcoin as property, aiming to tax profits from crypto trading by Russian residents. The bill targets all domestic residents including citizens and foreigners, as well as Russian and international organizations established in the country.
According to the bill, the listed entities will have to report their crypto transactions if a total amount of incoming or outgoing transactions exceeds 600,000 rubles ($8,100) on an annual basis.
The bill establishes penalties for violations like late reporting as well as providing inaccurate information, suggesting fines of up to 10% from incoming or outgoing transactions. The suggested fine for non-payment or incomplete tax payment is 40% of the unpaid taxes, the draft bill reads.
Following the committee’s approval, the Russian Duma is expected to consider the new crypto legislation on Feb. 17, according to official state records.
Russia officially enforced its first crypto law “On Digital Financial Assets” in January 2021, prohibiting local residents from making payments in cryptocurrencies. Despite providing legal status to the crypto industry in Russia, the bill does not address certain areas of digital assets, such as taxation and mining, leaving the regulatory landscape relatively uncertain.
Russian Mobile Carriers Consider Smartphone Integration For Digital Ruble
Russian wireless service providers MegaFon and Beeline proposed to link digital ruble wallets on smartphones to user’s phone numbers.
Major Russian mobile network operators like MegaFon and Beeline are considering how the digital ruble will function on their mobile devices.
According to a Feb. 16 report by local news agency Izvestia, Beeline and MegaFon proposed to set up smartphone wallets for Russia’s central bank digital currency.
The carriers also suggested additional services like linking a digital wallet to a customer’s phone number. This would allow users to store digital rubles directly on their smartphones as well as transfer and pay with the digital currency using smart devices, a spokesperson for MegaFon said.
According to Izvestia, both MegaFon and Beeline have been actively involved in digital ruble discussions with the Russian central bank. The companies’ representatives said:
“We are interested in digital ruble aspects like maintaining wallets on smart devices, which is not part of the current version of the concept, as well as the possibility of performing P2P payment transactions without the participation of financial intermediaries, including offline mode support.”
Olga Skorobogatova, first deputy governor at the Russian central bank, claimed in late 2020 that digital ruble wallets would be available through a platform by the Bank of Russia.
The Bank of Russia released its first consultation paper on the development of the digital ruble in October 2020. The bank said that users will be able to access the digital ruble on their e-wallets and mobile devices, both online and offline.
Russian Government Bans Officials From Holding Crypto
Russia’s Ministry of Labor has banned federal and local governmental officials — and their spouses and underage children — from holding digital currencies, CoinDesk reported.
The announcement, first published on the Ministry’s website in December, is reportedly a move to fight corruption, according CoinDesk, citing Russian news site Forklog. The prohibition is part of a larger legal reform that also bans government officials from opening accounts at foreign banks.
Officials have until April 1 to divest from any foreign cryptocurrencies, although they won’t be required to report any crypto holdings for the year 2020, the report stated.
Russia Proposes Law That Criminalizes Buying Bitcoin With Cash, Offenders Face 7 Years In Jail
Russian lawmakers have proposed new laws that seek to ban the use of bitcoin (BTC) and other cryptocurrencies in the country, local media reported.
According to draft bills submitted by a group of deputies to the Russian parliament recently, individuals may face up to seven years in prison and fines of up to $7,000 for using BTC in financial transactions.
People will also be penalized for buying crypto with cash or transferring to accounts opened with Russian banks.
If signed into law, the bills will punish companies that issue or operate virtual currencies without approval from the Russian central bank, with fines of up to two million rubles or about $28,000.
Furthermore, “for violation of the rules for transactions with cryptocurrencies, if they are used as payment for goods or services,” companies would have to pay the equivalent of one million rubles ($13,900) and individuals at least 200,000 rubles ($2,800).
The draft bills were lodged with Russia’s Ministry of Economic Development earlier this week, says a report published by local news company RBC on May 21. One of the proposed laws plans to completely stop digital assets from being used as a means of payment by citizens or corporations.
People that already hold digital assets will be forced to register them with Russia’s tax agency and explain how they acquired them. Another bill proposes to add new sections to the country’s criminal law for illegal operations with cryptocurrencies.
Companies that issue or circulate digital financial assets “using sites registered in Russia or technical equipment located in Russia” are especially liable under this second draft proposal.
Penalties may be compounded for both individuals and firms “if major or especially large damage was caused to citizens, organizations or the state, or if these actions led to enrichment on a large or especially large scale.”
Local lawyers fear that if these laws are enforced, they will paralyze the Russian cryptocurrency industry. Dmitry Kirillov, a senior tax lawyer at Bryan Cave Leighton Paisner and a teacher at Moscow Digital School, told RBC:
People who currently own cryptocurrencies will be forced to get rid of them before the law comes into force or risk ‘going underground.’ Goals that will be achieved this way are the direct opposite of what’s being declared.
In general, the idea of dropping a crypto ‘Iron Curtain,’ in my opinion, does not contribute to the development of businesses or Russia’s interaction with the world economy on a digital level.
Russia To Track Bitcoin Cash-Outs: Report
Russia’s anti-money laundering agency is going to identify and track down bitcoin-to-fiat sales, the government official said.
Russia’s law enforcement will be monitoring bitcoin-to-fiat transactions especially closely, according to the country’s financial surveillance agency, Rosfinmonitoring.
Rosfinmonitoring, which normally tracks money flows that might be linked to money laundering and terrorism financing, has its eyes on bitcoin. Now it will be paying special attention to cashing out of bitcoin, the agency’s deputy head German Neglyad said during a Wednesday hearing on the financial markets in the national parliament, news agency Regnum reported.
“Banks are already taking notice of such exchange operations, meaning that when they see the money coming in after trading virtual assets for hard currency, they calculate the value and notify us,” Neglyad said. He didn’t specify how banks identify such transactions, according to the report.
Neglyad added that Rosfinmonitoring is planning to add a new classification code for suspicious transactions involving crypto. According to his interview to the news agency TASS, also published on Wednesday, criminals in Russia are most often using bitcoin, ether and monero for purposes including terrorism financing.
While not specifying which terrorist groups were involved, he said the data was received in collaboration with other countries’ financial monitoring bodies.
Last August, Rosfinmonitoring said it was planning to develop its own blockchain transaction tracing tool that would allow the identification of the end beneficiaries of crypto transactions.
Russian President Vladimir Putin has called for an end to illegal cross-border transactions involving crypto. Cryptocurrencies have a status of taxable property in Russia, with specific taxation rules expected to become a law soon.
Russian civil servants have been explicitly banned from owning crypto, according to an order issued by the country’s Ministry of Labour in January. At the same time, bitcoin gained some traction as a fundraising tool among Russia’s civil and political activists.
Russia Aims To Limit Crypto Purchases By Non-Accredited Investors
The Bank of Russia also wants to slow down transactions to crypto exchanges to prevent “emotional” crypto purchases.
Anatoly Aksakov, chairman of the Russian State Duma Committee on Financial Markets, argued that Russia needs to adopt new laws to protect retail investors from the potential losses of investing in crypto, local news agency Interfax reported on Wednesday.
To this end, lawmakers in the country’s parliament are reportedly considering new legislation to limit cryptocurrency investments by non-accredited investors, he stated.
The official delivered his remarks during a Bank of Russia-backed event devoted to financial consumer protection.
“Digital currencies are subject to our enhanced focus, and we will look to provide maximum protection for our citizens who invest in digital assets because it is a new instrument, and it is quite difficult for an unskilled investor,” Aksakov said.
Cryptocurrency investment is associated with a lot of risk as well as promising returns, with global investors pouring billions of dollars into crypto, Aksakov said. “We certainly need to provide specific legislation to protect a non-professional investor from ill-considered investments in digital currencies,” he stated.
The latest news comes in line with the Bank of Russia’s new plans to slow down transactions to crypto exchanges in order to protect retail investors from “emotional” purchases of crypto. Sergey Shvetsov, the first deputy governor at the Bank of Russia, argued that this measure would protect Russian investors from losses in a scenario where the cryptocurrency market “crashes to zero.”
Cryptocurrencies like Bitcoin (BTC) have emerged as a popular investment tool in Russia. According to an August survey by Russia’s Association of Forex Dealers, 77% of Russian investors said that cryptocurrencies are the “most forward-looking” investment.
Russia Doesn’t Plan To Follow In China’s Footsteps By Banning Crypto Outright, Says Deputy Finance Minister
Crypto payments in the country are currently banned, but Russians have been allowed to purchase and trade digital assets like Bitcoin.
While Russia continues to enforce a ban on cryptocurrency payments as part of a law that took effect in January, the country has no plans at this time to completely prohibit trading by its citizens.
According to a Tuesday report from local news agency Interfax, Alexey Moiseev, the deputy finance minister of the Russian Federation, said he believes Russian citizens will continue to be allowed to buy and use cryptocurrencies outside the country on foreign exchanges without the threat of legal action at home.
Crypto payments in the country are currently banned, but Russians have been allowed to purchase and trade cryptocurrencies like Bitcoin (BTC).
“Russian citizens can have a wallet open outside the Russian Federation, but if they operate within the Russian Federation then they will be subject to bans, I think, for the entire foreseeable future, due to our financial sovereignty,” said Moiseev.
The deputy finance minister added that lawmakers still needed to properly define digital currencies and blockchain technology in Russia’s civil code. The Russian government has claimed accepting Bitcoin as an official currency could negatively impact the country’s financial and economic system.
Russia’s position stands in contrast to that of China, where financial and regulatory institutions have repeatedly issued anti-crypto statements and policies. Most recently, the People’s Bank of China declared that all crypto transactions in the country were illegal, and prior to that, miners in several provinces fled when faced with a crackdown on their operations.
However, certain Russian officials have claimed the use of a digital ruble issued by the country’s central bank would not pose the same financial risks as BTC and other cryptocurrencies. Anatoly Aksakov, chairman of the Russian State Duma Committee on Financial Markets, said last year that a Russian central bank digital currency could become an integral part of national settlements by 2024.
Putin Says He Accepts Crypto’s Role In Making Payments
Russian President Vladimir Putin signaled tolerance of cryptocurrencies, which are drawing increasing scrutiny from regulators around the world amid fears they can be used for money laundering and criminal activity.
Cryptocurrency “has the right to exist and can be used as a means of payment,” Putin said in an interview with CNBC that was posted on the Kremlin’s website Thursday. Still, he cautioned it was too soon to talk about using digital currencies for trading oil and other commodities that form the bulk of Russia’s exports.
Russia has sought alternatives to trading in dollars since being slapped with sanctions in 2014 following the annexation of Crimea, and Putin accuses the U.S. of using its currency as a weapon. Crypto backers argue decentralized money will eventually replace fiat currencies issued by central banks.
The Bank of Russia has repeatedly warned investors that the crypto market is extremely volatile, and digital currencies are not allowed to be used as a method of payment domestically. However, there are no plans for a blanket ban similar to China’s, Deputy Finance Minister Alexei Moiseev said this week, according to Interfax.
Putin’s tolerance of cryptocurrency comes as the White House considers launching a broad initiative to review and coordinate crypto policy across President Joe Biden’s administration that could lead to new regulations. China this year has cracked down on the industry and in September banned all crypto transactions.
Too Early To Talk About Using Crypto For Oil Trading, Says Putin
The Russian president has not excluded the possibility that, at some point, crypto will become a “means of accumulation.”
Russian President Vladimir Putin believes that it’s “still premature” to use cryptocurrencies for settling trades of energy resources such as oil.
The Russian president discussed potential use cases of cryptocurrencies in a Thursday CNBC interview following a plenary session of the Russian Energy Week forum.
According to a full interview text published on the Kremlin’s official website, Putin said that private cryptocurrencies “can act as a unit of account,” but they are “very unstable.”
“Cryptocurrency oil contracts? It’s too early to talk about it. It works for transferring funds from one place to another, but in terms of trading, especially when it comes to energy resources, it is still premature in my opinion,” the president stated.
Putin went on to say that “everything evolves” and “has the right to exist,” adding that the Russian government is closely monitoring the cryptocurrency market. He also did not exclude the possibility that at some point cryptocurrencies will become a “means of accumulation.” “We see how this market fluctuates. It’s a bit early today,” Putin added.
The president said that cryptocurrencies are “not backed by anything yet.” When asked whether he considers the crypto holdings by Tesla CEO Elon Musk to be “worthless,” Putin said no, explaining that he only questioned crypto as a unit of account in the context of energy trading.
During the interview, the Russian president also claimed that the United States dollar “undermines its position” as an international reserve asset. “We aren’t interested in cutting off dollar payments completely, and we are so far satisfied with payments for energy resources in dollars, primarily for oil,” he added.
The news comes as Russian authorities consider a new law to limit cryptocurrency investments by non-accredited investors.
Previously, the Russian central bank was reportedly planning to slow down transactions to crypto exchanges in order to protect retail investors from “emotional” purchases of crypto.
Bank Of Russia To Assess Bitcoin Holdings Volumes As $36B Leave Banks
The Bank of Russia remains skeptical on crypto despite the Russian president viewing it as a potential unit of account.
The central bank of Russia is trying to evaluate the amount of Bitcoin (BTC) held by local investors amid a massive amount of money not returning to banks following the pandemic-fueled withdrawals.
According to Elizaveta Danilova, head of the central bank’s financial stability department, the Bank of Russia is polling local cryptocurrency investors to estimate cryptocurrency investment volumes in Russia.
“We need to work both on data and raising public awareness about the risks of such investments, which are backed by nothing,” Danilova said in a Reuters interview published on the Bank of Russia’s official website on Thursday.
The official argued that the cryptocurrency market lacks transparency not only in Russia but also in other jurisdictions, pointing out higher risks of crypto derivatives products like Bitcoin futures or exchange-traded funds.
“The challenge is that the market is cross-border. People are able to invest in crypto through foreign intermediaries. Some major foreign exchanges trade cryptocurrency derivatives that carry huge risks,” Danilova stated.
The Bank of Russia’s efforts to analyze local crypto investment volumes come amid Russians not willing to put their money into banks recently. According to Danilova, as much as 2.6 trillion rubles ($36 billion) have not been returned to banks after massive withdrawals in 2020 due to the COVID-19 pandemic.
Some existing data proves that cryptocurrency investment has become extremely popular in Russia. According to a survey by Russia’s Association of Forex Dealers, as much as 77% of Russian investors prefer Bitcoin to traditional investment instruments such as gold and forex.
Amid the rising popularity of crypto, the Bank of Russia has urged the government to limit crypto investments by non-accredited investors, reportedly starting a legal initiative to slow down transactions to crypto exchanges to avoid “emotional” purchases of crypto.
Despite the Bank of Russia maintaining a skeptical stance on crypto, Russian President Vladimir Putin thinks that cryptocurrencies like Bitcoin work well for transferring funds worldwide and could become a “means of accumulation” one day.
Russia Aims To Replace US Dollar Reserves With Digital Assets In Long Term
Last week, the Russian president said it was “a bit early” to use cryptocurrencies to settle oil trades.
As Russia continues pushing de-dollarization, the Ministry of Foreign Affairs (MFA Russia) is reportedly considering replacing the United States dollar with not only traditional fiat currencies but also digital currencies.
Aleksandr Pankin, deputy minister of Foreign Affairs of Russia, reiterated the country’s plans to reduce the U.S. dollar share in Russia’s international reserves and its usage in settlement with foreign partners in a Tuesday interview with local news agency Interfax.
The official said that MFA Russia isn’t excluding the possibility of replacing the U.S. dollar with “some digital assets” alongside other currencies:
“It’s possible to replace the U.S. dollar with other currencies, both national and regional, as well as some digital assets in the long term.”
Pankin added that such replacement would require significant efforts from the government, including rebuilding established cooperation models between jurisdictions and businesses, as well as creating new mechanisms for new settlement systems.
The official noted Russia’s de-dollarization campaign comes in line with the country’s efforts to avoid challenges posed by sanctions from the U.S. government.
“Payments in U.S. dollars go through American banks and a clearing system, which allows Washington to block any transactions they deem suspicious,” Pankin said. He added that the Russian government has not faced such issues with the euro or other fiat currencies and doesn’t plan similar measures for any other national currencies so far.
For several years, Russia has been considering steps to cut the U.S. dollar share in its $186-billion national welfare fund. Local authorities are planning to dramatically increase its holdings of Chinese yuan and invest in gold.
The latest remarks from the Ministry of Foreign Affairs further reinforce Russia’s apparent interest in using crypto for international settlement. Last week, Russian President Vladimir Putin said that it was “a bit early” to use cryptocurrencies for settling oil trades. The president also admitted cryptocurrency’s potential for transferring funds globally.
Russian officials Consider Proposal To Mine Bitcoin With Associated Gas
Russian authorities continue to show increasing interest in cryptocurrencies as Bitcoin nears a new all-time high.
The Russian government is considering a new project to mine Bitcoin (BTC) with associated petroleum gas.
Vasiliy Shpak, deputy minister of Industry and Trade of Russia, has reportedly filed a proposal with the Russian central bank and the Ministry of Digital Development to use the country’s oil field equipment for mining cryptocurrency.
According to a report by Kommersant, the proposal was filed on Sept. 7, asking the government to provide its feedback on an initiative originally coming from local oil and gas companies.
The firms specifically proposed to use associated gas to power nearby data centers for mining Bitcoin. This type of natural gas, called associated gas, is a byproduct of oil drilling, but due to the incredible cost of proper gas infrastructure, it is often wasted through flaring, wherein the excess gas is simply burned off.
The Russian government has attempted to reduce gas flaring in order to cut emissions but has struggled to meet targets due to a lack of necessary infrastructure.
Using the gas for Bitcoin mining could potentially improve the efficiency of natural gas usage in thermal generation through “hybrid modules of digital currency extraction,” Shpak reportedly noted in the letter.
According to Kommersant, the project involves “one of Russia’s largest oil companies” that is struggling to scale its cryptocurrency mining project due to regulatory uncertainty.
Gazprom Neft, the third-largest oil producer in Russia, is reportedly the only company that has been involved in such a project, generating 1.8 BTC in just one month last year. The firm is mostly owned by the Russian government through the Federal Agency for State Property Management and Rosneftegaz.
Gazprom Neft did not immediately respond to Cointelegraph’s request for comment.
Bitcoin mining has been billed by entrepreneurs and politicians alike as a way to address the wasteful practice of flaring associated gas. Last week, United States Senator Ted Cruz recently said that there is an “enormous opportunity for Bitcoin […] to capture that gas instead of wasting it.”
Sanctioned Russian Oligarch Urges Central Bank To Embrace Bitcoin
The U.S. Treasury asked cryptocurrency companies to ensure compliance with sanctions last week.
Russian oligarch Oleg Deripaska has once again called on the Russian government to stop ignoring Bitcoin (BTC) after the United States Federal Bureau of Investigation raided his homes in Washington and New York.
In a Telegram post on Thursday, Deripaska argued that the Bank of Russia has been “infantile in ignoring the growing cryptocurrency market,” while the U.S. Department of the Treasury has been “investing particularly in this direction.”
The billionaire emphasized that cryptocurrencies like Bitcoin have massive potential to not only help Russia avoid U.S. sanctions but also weaken the U.S. dollar, stating:
“The U.S. had realized long ago that uncontrolled digital payments are capable of not only nullifying the effectiveness of the entire mechanism of economic sanctions but also taking down the dollar as a whole.”
Deripaska specifically referred to a U.S. sanctions review published by the U.S. Treasury in October 2021. According to the oligarch, the U.S. authority “effectively admitted” that the growing fintech tools like cryptocurrencies pose a serious threat to the U.S. dollar.
“This means that the development of the cryptocurrency market uncontrolled by the state can put the U.S. Treasury in front of a potential default due to its $30 trillion debt,” Deripaska argued.
“It’s time to open your eyes and take cryptocurrency seriously. In the aging American establishment, there are still a lot of people willing to fight,” he stated.
Last Friday, the U.S. Treasury published a brochure providing guidance for cryptocurrency companies to make sure that they are complying with U.S. sanctions. In the document, the authority said that sanctions by the Office of Foreign Assets Control (OFAC) “apply equally to transactions involving virtual currencies and those involving traditional fiat currencies,” adding:
“Members of the virtual currency industry are responsible for ensuring that they do not engage, directly or indirectly, in transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade- or investment-related transactions.”
Deripaska’s latest remarks come after FBI agents raided homes linked to the oligarch in Washington and New York City on Tuesday. A Deripaska representative reportedly said the searches were carried out on the basis of two court warrants related to U.S. sanctions. With reported close ties to Russian President Vladimir Putin, Deripaska was placed under U.S. sanctions in 2018.
The Russian oligarch has slammed the Russian central bank for rejecting Bitcoin before. In June, the billionaire argued that Russia needed to move into crypto to provide a “real financial instrument enabling independence in foreign trade settlements.”
Russia Does ‘Absolutely Nothing’ To Regulate Crypto, RACIB Head Says
The recent law “On Digital Financial Assets” has not gone far enough in the eyes of Russian crypto industry advocates.
Despite Russia adopting its first cryptocurrency law in January 2021, the country’s cryptocurrency market is still largely unregulated and is associated with a lot of uncertainty, according to a local industry advocate.
Yury Pripachkin, head of the Russian Association of Cryptoindustry and Blockchain (RACIB), argued that the existing Russian crypto regulations are nothing more than “half-measures” that have nothing to do with systematic solutions.
In an interview with local news agency RBC, Pripachkin referred to Russian President Vladimir Putin issuing multiple consecutive mandates to adopt crypto regulation over the past four years. The executive highlighted that the total market capitalization of cryptocurrencies surged from around $200 billion in 2017 to the current $2.7 trillion, but local lawmakers have essentially done nothing to capture this value.
“Russia has done absolutely nothing to regulate the local cryptocurrency market, which accounts for 10% of the global crypto market,” Pripachkin said. He added that the size of the Russian crypto market is comparable to the annual federal budget revenue of $270 billion.
Pripachkin claimed that Russia’s crypto law “On Digital Financial Assets” provides a legal basis to crypto in the broad sense, but it neither defines major industry terms such as smart contracts nor regulates activities such as crypto mining, issuance and taxation.
The head of RACIB is not alone in thinking that the Russian cryptocurrency industry is largely a grey zone. Anna Maximenko, a counsel at the international law firm Debevoise & Plimpton, believes that the current crypto regulation in Russia is “limited to the definition of cryptocurrency” and a few other aspects such as the ban on crypto payments.
“Other aspects of cryptocurrencies’ turnover, including exchanges and requirements to the investors, are currently not regulated,” Maximenko told Cointelegraph. According to the expert, the absence of regulation leads to a situation where no crypto exchanges are registered in Russia, with residents still being able to use services of foreign crypto exchanges like Binance, Huobi Global, Paxful and others.
“Taking into consideration the Bank of Russia’s negative stance on cryptocurrencies, it may well be the case that there will be no Russian crypto exchanges, while foreign crypto exchanges will stay in a grey zone,” Maximenko said.
The news comes as the Russian government shows increasing interest in cryptocurrencies like Bitcoin (BTC), with some ministries proposing to mine the cryptocurrencies with associated gas.
However, the Russian government remains skeptical of Bitcoin when it comes to the interest of its own residents, with the Bank of Russia looking to limit transactions to crypto exchanges as crypto investment has become extremely popular among local investors.
Russian Crypto Market Worth $500B Despite Bad Regulation, Says Exec
Many crypto exchanges with Russian roots have fled the country or operate illegally, Blockchain Life’s founder said.
The Russian cryptocurrency market has grown to hundreds of billions of dollars despite the absence of sufficient cryptocurrency regulation, according to a major industry executive.
Sergei Khitrov, founder of the Russian cryptocurrency event Blockchain Life and Listing.Help, gave a keynote speech on the state of cryptocurrency regulation in Russia at the VII Blockchain Life Forum in Moscow on Wednesday.
Based on insights including local cash flows related to services like cryptocurrency mining, Khitrov estimated the Russian crypto market to be worth 20–40 trillion rubles ($280–$550 billion).
He also claimed that Russian crypto businesses could generate as much as 284 billion rubles ($4 billion) worth of taxes per year, should the Russian government provide more comfortable regulations for the industry.
But as Russian regulators have continued ignoring the industry’s interests over the past several years, local crypto businesses could do nothing but continue operating illegally or flee to other jurisdictions in order to survive, Khitrov told Cointelegraph.
“Without regulations that take into account the interests of the crypto community, crypto services will not be legally provided. It isn’t profitable for business to step out of the shadows,” he said.
Not a single home-grown cryptocurrency exchange has officially established its business in Russia despite the significant market size, Khitrov stated:
“We know a lot of crypto exchanges with Russian roots, but unfortunately, these exchanges are either not officially registered or just based in other jurisdictions.”
The executive said that he’s been deeply committed to negotiating crypto legislation with various government authorities, and regulators have been well aware of local crypto people and businesses fleeing to other jurisdictions. According to Khitrov, the Russian government has been looking for ways to bring big crypto businesses home but has failed to meet the industry’s demands.
He also stressed that the Russian crypto community has so far demonstrated a “complete failure” to understand how to pay taxes on crypto.
Founded in 2017, the Blockchain Life forum is a major Russian cryptocurrency event that takes place twice a year.
The latest Blockchain Life forum was in Moscow on Tuesday and Wednesday, bringing together more than 5,000 attendees and speakers, including industry representatives and state officials, such as Russian internet ombudsman Dmitry Marinichev and the Ministry of Economic Development’s Alexey Minaev.
The forum featured executives from major global crypto exchanges, such as Huobi and Exmo, as well as local crypto entrepreneurs, largely representing retailers of Chinese Bitcoin (BTC) mining hardware. The event also featured a nonfungible token (NFT) auction organized through Binance NFT, the NFT platform and marketplace operated by the world’s largest crypto exchange.
Major Russian Bank Explores Crypto Investment Amid Strong Demand
One way or another, Russians get exposure to crypto even if they go abroad, Tinkoff Investments’ head said.
Tinkoff Investments, the online brokerage of major Russian private bank Tinkoff, is researching cryptocurrency investment services despite the Bank of Russia withholding the bank from launching such tools.
Tinkoff Investments head Dmitry Panchenko claimed that the bank’s brokerage portal is considering projects related to cryptocurrency investment, but it’s too early to discuss specific ideas.
The company is now working on research and development initiatives targeting a range of crypto-related services, Panchenko said in a Thursday interview with local news agency TASS. Tinkoff Investments is specifically looking at crypto products by companies like international payment giant PayPal, as well as crypto-friendly apps like Revolut and Robinhood.
Panchenko emphasized that despite local regulators not yet allowing companies like Tinkoff Investments to provide crypto investment services, Russians are still actively trading crypto on foreign platforms, having more than $15 billion worth of crypto assets on exchanges:
“One way or another, people get exposure to crypto and they do it outside of the country. It would be potentially correct to provide such services within the Russian legal system. This is not possible legally today, but the issue needs to be discussed and studied more deeply.”
Panchenko added that brokerages like Tinkoff stand to benefit from the adoption of crypto investment services. He also stressed that the bank has seen growing demand particularly for investments in crypto as opposed to using crypto for payments, which is prohibited in Russia by the country’s crypto law “On Digital Financial Assets.”
Tinkoff Did Not Immediately Respond To Cointelegraph’s Request For Comment.
The news comes months after Tinkoff CEO Oliver Hughes claimed that the Russian central bank was withholding Tinkoff from offering crypto trading services. “There’s no mechanism for us to offer that product to them in Russia at the moment because the central bank has got this very tough position,” Hughes said.
Crypto Can Erode Tax Base, Russia’s Tax Boss Says
The Russian State Duma approved a bill on crypto taxation in early 2021, but the bill has yet to move any further.
The Russian Federal Taxation Service (FTS) is actively monitoring the cryptocurrency market to prevent tax evasion, FTS head Daniil Egorov said.
Cryptocurrencies can potentially cause “significant erosion” to Russia’s tax base, Egorov argued in a Monday interview with the local publication RBC.
But cryptocurrency transactions are still traceable and should be reported, the official said, adding that the FTS is ready to deploy automated tracking systems to process big data volumes.
“When you get into the digital space, you still leave a trail somewhere. And it’s a matter of time before this trail is identified,” Egorov declared.
The official also noted that the FTS is now coming up with ways of responding to crypto tax evasion practices as the authority looks to curb such activity rather than just to identify it. “We would like to find solutions that shut down a problem as a phenomenon rather than just identifying actions by a specific player,” Egorov added.
The news comes shortly after the Bank of Russia last week proposed to introduce criminal liability for “illegal circulation of digital financial assets” as part of the country’s financial market goals for 2022 and the period of 2023–2024. As part of the proposal, the central bank is looking to establish the cryptocurrency taxation procedure.
The Russian State Duma approved a bill on cryptocurrency taxation in the first reading in February 2021, requiring residents to report crypto transactions of a total amount exceeding $7,800 per year. In order to move forward with the second reading, lawmakers decided to assign a responsible committee, the State Duma Committee on Budget and Taxes, in mid-October.
According to Sergei Khitrov, founder of the Russian cryptocurrency event Blockchain Life, Russian crypto businesses could potentially generate as much as $4 billion worth of taxes per year. According to him, the local crypto community has so far demonstrated a “complete failure” to understand how to pay taxes on crypto.
The news comes as American lawmakers fight back against changes to tax reporting rules for crypto transactions over $10,000 in the newly passed infrastructure bill. The bill was initially approved by the Senate in August, which was met with a proposal for a compromise amendment by a group of six senators, including pro-Bitcoin (BTC) Senator Cynthia Lummis.
Russians Transact $5B In Crypto Each Year, Bank Of Russia Says
Though Russia has become a global leader in the crypto market, the Bank of Russia is still skeptical about Bitcoin.
Russian people are among the world’s most active participants of the cryptocurrency market, according to the country’s central bank.
The Bank of Russia published a fresh review on financial stability on Thursday, pointing out the country’s growing role in the $2.8 trillion market.
Citing estimations reported by major local banks in July 2021, the Bank of Russia suggested that the total annual volumes of crypto transactions of the Russian population amount to 350 billion rubles, or $5 billion.
It is unclear whether the Bank of Russia has converted these estimations as the price of Bitcoin (BTC) has almost doubled since July, surging from around $30,000 to over $60,000 in November.
In the report, the Bank of Russia also noted that the Russian Federation is among global leaders in terms of visits to the Binance cryptocurrency exchange. According to data from the digital intelligence provider SimilarWeb, Russia is the second bigg in terms of total traffic on Binance after Turkey.
The Russian central bank also noted that Russia is one of the world’s largest Bitcoin mining countries, ranking third in terms of national hash rates, according to Cambridge Bitcoin Electricity Consumption Index as of August 2021.
Despite admitting Russia’s leading position in the global cryptocurrency market, the Bank of Russia still outlined major risks associated with the industry, including those associated with financial stability, investor protection, money laundering and criminal financing as well as ESG risks.
The central bank did not suggest any immediate measures to address these risks but said that it would be closely monitoring the market to identify potential threats:
“The relationship between digital currencies and the financial sector remains limited at the moment. However, the rapid growth and the widespread adoption of digital currencies would pose higher risks both globally and for the Russian financial market.”
The Bank of Russia has taken a hard stance on cryptocurrencies, with governor Elvira Nabiullina arguing that responsible governments should not drive crypto adoption. The central bank is known for not allowing local banks to deal with crypto and promoting the use of its own digital currency instead. This has led to a situation where no Russian crypto exchange can now offer its services legally.
Russians Conduct $5B Worth Of Crypto Transactions A Year, Central Bank Says
The regulator said it is worried people will start putting their savings into stablecoins.
Some $5 billion (350 billion Russian rubles) of crypto changes hands in Russia every year, the country’s central bank said in its Financial Stability Overview report published Thursday. However, crypto-related risks to the country’s financial stability are currently low because they are mostly isolated from the mainstream financial system, the report says.
The reports cite a July poll of Russia’s largest banks. It does not give details on the kinds of transactions or how banks identify those that are crypto related. The Bank of Russia had not responded to a CoinDesk request for details by publication time.
“According to some indirect estimates, Russian investors in digital currencies are among the most active on the market,” the report says. Russia is one of the biggest markets for Binance, the world’s largest crypto exchange, and the number of Russian users on other global trading platforms is increasing, according to the report.
The growing interest for crypto could become a risk for Russia’s financial stability, the regulator said. “Bitcoin and other digital currencies aren’t backed by anything, investments might be lost because of price volatility, fraud or cyber threats,” the report says.
Crypto’s anonymity makes it popular for uses such as money laundering, drug trafficking and terrorism financing, thwarting efforts to prevent those activities by the regulators. Another risk is that people might put part of their savings into crypto, a problem similar to when consumers prefer foreign currencies to their national one for savings, the report notes.
The report also mentions concerns related to energy consumption in the process of cryptocurrency mining, which is “negatively affecting the climate.”
The regulator needs to keep monitoring the market for new threats, the document adds.
Crypto Is A Hedge For 46% Of Russian Retail Investors, Survey States
Bitcoin was the most popular cryptocurrency in Russia in October, outpacing coins such as Tether and Litecoin.
Almost half of retail investors in Russia believe that cryptocurrencies like Bitcoin (BTC) are a hedging asset associated with stable income, according to a new survey.
Financial publication Investing.com has polled 1,000 Russian retail investors to find out the most requested types of alternative investments.
According to the survey, as many as 46% of respondents viewed cryptocurrencies as a potential defensive asset allowing them to hedge against financial risks at times of an economic crisis.
Russian retail investors favored crypto more than real estate, while just 37% of respondents investing in alternative assets considered buying real estate an effective investment instrument.
Real estate has been historically the top hedging asset in Russia, according to Anastasia Kosheleva, head of Investing.com’s Russian division. She noted that cryptocurrencies have emerged as the biggest investment trend in 2021, as they outstripped other traditional assets including foreign exchange currencies and stocks.
According to a study by big data platform Brand Analytics, Bitcoin was the most popular cryptocurrency in Russia in October, outpacing coins such as Tether (USDT) and Litecoin (LTC) in terms of social media mentions.
Cryptocurrencies have been growing increasingly popular among Russian investors in recent years, with 77% of Russian investors preferring Bitcoin to gold in a survey last year.
Last week, the Bank of Russia published a financial stability report, noting the country’s growing role in the global $2.8-trillion cryptocurrency market. The central bank mentioned that Russia ranks third in the world in terms of the national BTC hash rate and is one of the biggest users of the Binance cryptocurrency exchange.
Amid growing inflation and the ongoing COVID-19 pandemic, global investors have been increasingly looking at cryptocurrencies like Bitcoin as a hedge against financial risk.
According to Damien Courvalin, head of energy research at Goldman Sachs, investors have been increasingly hedging against inflation using crypto in addition to traditional assets such as gold. “Just like we argue that silver is the poor man’s gold, gold is maybe becoming the poor man’s crypto,” he said in mid-November.
Previously, Pendal Group head of alternative duration strategies Vimal Gor argued that cryptocurrencies should be added to new alternative defensive portfolios as government bonds have lost their value as a hedge against risk.
Vladimir Putin Says Cryptocurrencies ‘Bear High Risks’
The remarks came at a time when the country’s crypto regulatory framework remains underdeveloped.
On Tuesday, Vladimir Putin, President of the Russian Federation, voiced his criticism at the “Russian Calling” investment forum in Moscow. According to local news outlet lenta.ru, the president made the following remarks, as translated by Cointelegraph:
“It is not backed by anything, [and] the volatility is colossal, so the risks are very high. We also believe that we need to listen to those who talk about those high risks.”
Putin called for the greater monitoring and regulation of cryptocurrencies and pointed out that certain countries worldwide are seeing significant adoption of digital currencies. Currently, cryptocurrency regulation is still in its infancy in Russia. Although the government is considering the launch of a central bank digital currency, at least eight federal laws and five legislative codes must be changed for the digital ruble to take effect.
Furthermore, no regulation exists in the country regarding cryptocurrency mining. This has led some to claim that $2 billion in crypto mining revenue is generated annually in Russia, but on that, no taxes are paid. Due to the lack of a regulatory framework, cryptocurrency use has soared among ordinary Russians, with transactions surpassing $5 billion each year.
In other parts of the former Soviet Union, cryptocurrencies are also rapidly gaining in traction. Kazakhstan has become the world’s largest Bitcoin (BTC) miner by hash rate, and its president is seeking to collect more taxes from such activities to fund the country’s expenses. In Ukraine, the government is actively encouraging legal crypto operations. Last year, the Polish city of Olsztyn began adopting the Ethereum (ETH) blockchain for emergency services.
Russia’s Largest Bank Struggles To Register Its Digital Asset Platform
State-owned bank Sber is trying to launch digital asset tools, but regulators remain skeptical about the industry.
Sber, Russia’s largest bank, is apparently struggling to obtain regulatory approval for its digital asset issuance platform as the company continues delaying registration plans.
Sber CEO Herman Gref announced Tuesday that the bank now expects its digital asset issuance platform to have been registered with the Bank of Russia by the end of 2021, local news agency Prime reported.
“We are in constant contact with the central bank, and we are discussing various issues. We really want to believe that the platform will be registered by the end of this year,” Gref said.
The new comments come almost a year after Sber initially filed an application with the Bank of Russia to launch a blockchain platform for its Sbercoin stablecoin in January 2021. At the time, Sber director of transactions Sergey Popov said that the registration procedure usually takes no longer than 45 days. As such, the bank had b expecting to launch its platform and the stablecoin by spring 2021.
While unable to move forward with the plans by the fall, Sber then said that it was planning to register its digital asset issuance platform in September.
Sber did not respond to Cointelegraph’s requests for comment on the matter.
Sber’s delayed plans hardly come as a surprise, as Russia’s central bank has taken a hard stance on cryptocurrencies like Bitcoin (BTC) and has even barred some major banks from offering crypto investment services. The bank has said that such services do not “meet the interests of investors and bear great risks.”
In the meantime, Bank of Russia governor Elvira Nabiullina believes that tools such as central bank digital currencies should serve as a good option for governments to replace decentralized cryptocurrencies.
Bank of Russia To Ban Mutual Funds From Investing In Bitcoin
Mutual funds in Russia will not be allowed to provide crypto exposure to qualified or unqualified investors.
The Russian central bank continues its strict policies regarding the cryptocurrency industry, now officially banning mutual funds from investing in cryptocurrencies like Bitcoin (BTC).
On Monday, the Bank of Russia published an official statement on regulating investment opportunities by mutual investment funds.
Despite expanding the number of assets available for investment by mutual funds, the document prohibits fund managers from buying cryptocurrencies as well as “financial instruments whose value depends on prices of digital assets.”
The statement emphasizes that mutual funds are not allowed to provide crypto exposure both to either qualified or unqualified investors.
The Bank of Russia previously recommended that asset managers exclude cryptocurrencies from exposure in mutual funds in July 2021. According to a report by local news agency RBC, there have been no Russian mutual funds with crypto exposure despite there having been no formal ban until now.
Artem Deev, head of the analytics department at the brokerage firm AMarkets, reportedly said that Russia has only one industry-related exchange-traded fund (ETF) so far.
According to Deev, the fund is managed by the joint-stock management company “BrokerCreditService” and invests in companies focused on decentralized data storage and blockchain, including firms like Jack Dorsey’s Block, PayPal and Broadcom.
Russia’s largest bank, Sber, is reportedly also planning to launch a blockchain-focused ETF, Sber’s asset management head Vasily Illarionov said. The ETF will be called “Blockchain Economy” and will invest in stocks related to blockchain adoption. Illarionov noted that the fund does not fall under the restrictions of the Bank of Russia and can be offered to retail investors.
As previously reported, the Bank of Russia has taken a hard stance on cryptocurrencies and has barred some big banks from offering crypto investment services. The regulator argued that such services do not “meet the interests of investors and bear great risks.”
Bank of Russia Governor: Banning Crypto In Russia Is ‘Quite Doable’
“We cannot welcome investments into cryptocurrencies,” says Central Bank of Russia governor Elvira Nabiullina.
In a Friday press conference, Central Bank of Russia governor Elvira Nabiullina further escalated the fear, uncertainty and doubt (FUD) surrounding the state of crypto regulation in the country. When asked about the rise of digital assets, Nabiullina gave the following remarks, as reported by local news outlet finmarket.ru and translated by Cointelegraph:
“You know that our attitude towards cryptocurrencies is of, to put it mildly, skepticism. Related to this are the significant risks for retail investors and the substantial volatility for this type of asset. In addition, cryptocurrencies are opaque in that they are frequently used for illegal operations or criminal nature. Therefore, we cannot welcome investments in them. We seek to prevent the Russian financial infrastructure from using crypto transactions. This is quite doable.”
Nabiullina’s remarks came one day after conflicting reports pointed to the possibility of a blanket ban on cryptocurrency exchanges in Russia. As Cointelegraph recently reported, concerns about crypto have even made their way to the presidential office, with Vladimir Putin issuing a warning about digital assets.
In context, countries of the former Soviet Union remain far more susceptible to financial crimes, such as money laundering or tax evasion, than their Western counterparts. This is because the privatization of state enterprises from the breakup of the USSR concentrated power in the hands of individuals who possessed enough “capital” to purchase shares at that time — mafias, gangs and black-market participants.
Relatively speaking, the anonymous, borderless, instantaneous and regulatory-lacking nature of crypto would therefore be a greater enabler of criminal activities in the region. Partly to combat the problem, Russia is prioritizing the development of a regulatory-compliant digital Ruble as a sizable competitor to cryptos developed in the private sector.
Bank Of Russia To Allow Crypto Investment Via Foreign Firms
Russian citizens and businesses will reportedly have the right to acquire Bitcoin, but not via local infrastructure.
Russia continues sending mixed signals to the cryptocurrency markets as more reports provide details on the country’s upcoming crypto regulation.
Shortly after Bank of Russia governor Elvira Nabiullina announced the Bank’s intention to prevent the local financial system from using crypto, another executive at the central bank clarified that crypto investment will remain legal in Russia.
There will be one important condition: Russians will only be able to invest in cryptocurrencies like Bitcoin (BTC) through foreign companies, deputy governor Vladimir Chistyukhin said, according to a Monday report by the state-owned publication TASS.
“Russian citizens and businesses have the right to acquire and hold cryptocurrency, but not through the domestic infrastructure or intermediaries,” Chistyukhin reportedly noted.
The official claimed that the Russian government is working to provide more regulatory clarity on the crypto industry, promising that local authorities will be considering legal initiatives regarding the matter.
Chistyukhin mentioned that the central bank of Russia is now preparing an advisory report to describe in detail its vision regarding the role of crypto in the Russian financial system, stating:
“I’ll give you a hint. We don’t see a place for cryptocurrency in the Russian financial market.”
The latest remarks come shortly after Anatoly Aksakov, chairman of the Russian State Duma’s Committee on Financial Markets, announced on Thursday that Russia will choose between a blanket crypto ban and legalizing exchanges in 2022. On Monday, Aksakov reportedly claimed that Russians have invested over $67 billion in cryptocurrencies like Bitcoin, calling for urgent regulations.
Russia’s potential plan to allow crypto investment only via foreign crypto exchanges doesn’t appear to be surprising as the country doesn’t have a single legal Russia-born crypto exchange.
According to Blockchain Life’s founder Sergei Khitrov, many crypto exchanges with Russian roots have fled the country or just continue operating illegally. Moscow City, a financial district in Russia’s capital, reportedly counts roughly 50 cryptocurrency exchanges involved in illegal activity, according to some investigations.
On the other hand, services of global crypto exchanges like Binance are very popular in Russia, as Russia is the second-biggest country in terms of total traffic on Binance.
Industry Experts Reveal A Possible Method For Bank Of Russia To Block Crypto
Bank of Russia’s crypto restrictions through MCC would unlikely affect exchanges that have been operating illegally so far.
Amid the ongoing uncertainty about the future of cryptocurrencies in Russia, one local industry executive has disclosed a potential method for the Bank of Russia to block crypto transactions.
Andrey Mikhaylishin, CEO of the local crypto payment startup Joys, said that the Russian central bank is now considering several potential options to make its crypto ban possible, Forbes Russia reported Friday.
One of the possible restriction methods includes blocking debit card payments to crypto exchanges or wallets using merchant category codes (MCC), Mikhaylishin said. The report notes that the executive became aware of this blocking method from Bank of Russia employees.
MCC codes are four-digit numbers used by credit card processors such as Visa or Mastercard to describe a merchant’s primary business activities. For example, crypto transactions are usually identified with the 6051 MCC code, while payments at grocery stores have the 5411 MCC code. According to the report, the Bank of Russia could oblige local banks to simply ban transactions with the 6051 MCC code.
While the potential plan is apparently still being discussed in Russia, some industry figures have questioned the effectiveness of such a strategy.
Maria Stankevich, a member of the Russian Committee on Blockchain Technologies and Cryptoeconomics, told Cointelegraph that potential MCC-based restrictions would trigger transparent businesses to leave the country while not affecting illegal crypto exchanges:
“I am 100% sure if they prohibit transfers to cryptocurrency with the right MCC, then honest exchanges will leave the market in the first place. There will remain grey crypto exchanges, which will do so-called miscoding, using other codes for transactions.”
Stankevich suggested that miscoding penalties at providers like Visa are insufficient for illegal crypto exchanges to stop their operations. As previously reported, there are several grey crypto businesses in Russia, with at least 50 of them located in Moscow City, a financial district in Russia’s capital.
The executive also expressed optimism about the cryptocurrency industry in Russia, pointing out that the Bank of Russia is essentially the only regulator that is against crypto adoption in the country:
“We have always known that the central bank is against crypto and wants it to be banned, but I still don’t think that this will be the way for Russia because the central bank is in the minority there.”
“I personally know many high-ranking officials in Russia that understand the importance of crypto,” Stankevich added.
The news comes after Bank of Russia governor Elvira Nabiullina announced the bank’s intention to prevent the local financial system from using crypto. Another executive at the bank subsequently claimed that Russians will only be able to invest in cryptocurrencies like Bitcoin (BTC) through foreign companies.
Russian Bank Sber Launches Blockchain ETF tracking Coinbase, Galaxy Digital
Called “Sber — Blockchain Economy,” the ETF will trade under the ticker SBBE and track major crypto companies.
Sber, the Russian government-backed company and the largest bank in the country, is launching a blockchain exchange-traded fund (ETF) to track the performance of major crypto companies, such as Coinbase and Galaxy Digital.
Sber Asset Management officially announced the news on Thursday, stating that the new ETF is linked to various blockchain and crypto industry firms, including hardware and software providers for mining and issuing crypto assets.
Called “Sber — Blockchain Economy,” the fund is set to trade under the ticker SBBE and will track the eponymous index developed by Sber’s investment subsidiary SberCIB.
SBBE’s portfolio will include some of the world’s biggest crypto companies, including the United States’ largest exchange, Coinbase; Mike Novogratz’s investment company, Galaxy Digital; and blockchain software provider Digindex.
While SBBE’s currency is the U.S. dollar, investors will be able to buy shares with Russian rubles in the SberInvestor app or via “any other Russian broker.” The share price starts at 10 rubles ($0.013), the announcement notes.
According to the announcement, Sber’s blockchain ETF will be the “first ETF in Russia to allow investors to make money in the blockchain market without difficulties associated with direct development, buying, holding and selling digital currencies.”
“Direct investments in crypto assets are associated with high risks, so it’s difficult to deal with them on your own. As such, we offer to invest not in crypto but rather in firms focused on the development of blockchain technologies,” Sber Asset Management CEO Evgeny Zaitsev said. He added that the new ETF will be available to “any individual.”
The news comes shortly after Sber Asset Management executive Vasily Illarionov disclosed the company’s blockchain ETF plans in mid-December. He said that the fund does not fall under the Bank of Russia’s restrictions and can be offered to retail investors.
As previously reported, the Russian central bank banned mutual funds from buying cryptocurrencies like Bitcoin (BTC) and providing crypto exposure to either qualified or unqualified investors.
Owner of Russian Bank Tinkoff Acquires Swiss Digital Asset Firm
Russian banks have been increasingly moving into the digital asset market despite the Bank of Russia’s hostility toward crypto.
TCS Group, the owner of the major private Russian bank Tinkoff, is gaining exposure to digital assets.
The firm has invested in Swiss digital asset service provider Aximetria, which is set to become the company’s first major crypto-related outfit, local news agency The Bell reported Wednesday.
Citing data from Aximetria, the report suggests that TCS purchased 4,449 Aximetria shares worth 100 Swiss francs ($108) per share. Given that Aximetria’s total share capital was about 535,000 francs ($578,000), the publication reported TCS’ stake to be around 83.2%.
A spokesperson for Tinkoff confirmed the news to Cointelegraph, stating that Aximetria will be “part of the international expansion of Tinkoff Group in compliance with all the requirements of the jurisdictions of international presence.”
The representative emphasized that Aximetria is “not a crypto exchange” but rather a “financial service in the digital asset industry.”
At the time of writing, Aximetria’s main page includes details on the firm being part of TCS. Aximetria lets users open a “Swiss crypto account” with free deposits and withdrawals in euros or U.S. dollars. The platform says it targets clients worldwide.
Amid skyrocketing demand for crypto investments, Tinkoff has been struggling to offer crypto investment services in Russia as the Bank of Russia reportedly stopped the company from launching its own suite of related services. This led to a situation where Russia has no single legal company that is based in the country and offers crypto investment.
The central bank is known for its hostility to the crypto industry and Bitcoin (BTC). However, it reportedly wants to allow people to invest in crypto investment using foreign platforms.
Despite the ongoing harsh stance of local regulators, Russia’s largest bank, Sber, launched a crypto exchange-traded fund in December, tracking major crypto investment firms and exchanges like Coinbase and Galaxy Digital. Formerly known as Sberbank, the state-backed firm was previously planning to launch a crypto exchange business under its Sberbank Switzerland subsidiary back in 2018.
Russia Proposes Crypto Crackdown. Bitcoin’s Reaction? No Problem
* Largest Digital Coin Surpasses $43,000 Amid Russia Crypto News
* The Currency Is More Mature At This Point Than In Past: Tawil
Russia’s central bank on Thursday proposed a complete ban on crypto mining and trading. Bitcoin’s reaction: No worries.
The largest digital currency by market value rose as much as 4.2% to $43,463 during New York trading hours. That’s even as Russia, which houses roughly 10% of global Bitcoin mining activities, said digital assets bear the hallmarks of a pyramid scheme and could pose a threat to the country’s financial system.
A proclamation by China last year — which had earlier instituted a similar ban — sparked a major selloff because it had been seen as a major regulatory move that affected a lot of mining operations and posed outright antagonism toward cryptocurrencies. So why is there a muted market reaction this time around?
“Bitcoin mining is certainly growing faster than whatever it is losing in these announcements. A good way to say it is the currency is more mature at this point,” David Tawil, president of ProChain Capital, said by phone. “Today, we’ve progressed far beyond this.”
But, as is usually the case for Bitcoin and crypto moves, explanations abound. Here’s a roundup of what investors and analysts had to say about Russia’s move and how crypto prices could be affected:
Scott Freeman, Co-Founder And Partner At JST Capital, A Financial Services Firm Specializing In Digital Assets:
“The recent announcement by the Russian Central bank that they want legislation to ban mining crypto currency has had no effect on the market. We think this is a reflection of the relatively small percentage of mining that takes place in Russia and the fact that the miners were able to adjust so quickly when China prohibited mining. Additionally, we believe more capacity is already targeted to come online in the U.S. and other places where there is access to cheaper and cleaner energy.”
Matthew Sigel, Head Of Digital Assets Research At VanEck Associates:
“We saw a rapid exodus of miners from China and a temporary drop in the amount of electricity being used to power to Bitcoin network. It took some time for that energy to be sourced from other countries, principally the U.S., and we’d expect the same thing to occur should Russia crackdown on Bitcoin network participants,” he said. “One common thread we’ve seen is that authoritarian dictatorships, such as China and Russia, tend to fear the transparency that the Bitcoin network provides users.”
Marcus Sotiriou, Analyst At U.K.-Based And Canada-listed Digital-Asset Broker GlobalBlock:
“This news is significant considering Russia’s trading volume last year was reportedly $5 billion and a ban will heavily impact this. However, I think Russia banning crypto is not a big deal in the long term, as other countries, who are more accepting of digital assets, will benefit from Russia’s move should a ban actually be imposed by law. Miners will potentially relocate if they have to, so this ultimately means that miners in welcoming jurisdictions will profit.”
Anastasia Amoroso, Chief Investment Strategist At iCapital:
“There’s been a lot of changes in the crypto ecosystem in the last couple of years and one of them has been a lot of miners relocating from places like China to more favorable locations like the United States. So I think that’s part of the reason why you don’t have a severely adverse market reaction because a lot of that relocation has already been done in the last couple of years,” she said by phone. “Because the crypto community worried about the potential regulatory adversity from places like Russia and China, a lot of mining operations have been moved.”
Max Gokhman, Chief Investment Officer At AlphaTrAI:
“Putin and Xi often follow each other’s policy moves and both are concerned about the capital flight that comes from crypto. Russia, to their credit, was upfront about that,” he said. “Sometimes we see these situations where crypto news is surprisingly slow to filter into prices — perhaps some HODLers are hoping the policy won’t be signed into law, but to me this seems likely push BTC further down toward the $30,000 level that it’s likely to hit before the next cyclical rally.”
Marc Chandler, Chief Market Strategist At Bannockburn Global Forex:
“Russia may be an important location for mining but not trading. And I think Russia already bans the use of crypto as money — i.e. use in payments. I suspect many Russians who hold crypto are offshore accounts. But I am hesitant to push the line hard because then is says there is a rhyme and reasons to crypto movement.”
Larisa Yarovaya, Associate Professor Of Finance At The University Of Southampton:
The “impact of this will be significant. First, at the very least, it will cause immediate cryptocurrency market reaction, and our recent research shows that such events and announcements are increasing both price and policy uncertainty in cryptocurrency markets. Second, it will cause further miner migration processes and changes in Bitcoin mining landscape,” she wrote by email. “Do not forget the impact of Kazakhstan political unrest here. After China banned Bitcoin, miners moved to Kazakhstan and the U.S., among other locations. Today, I suspect it will be harder for Russian miners to move their businesses to Kazakhstan considering current political situation. Therefore, it might make a bigger deal for Bitcoin/crypto this time.”
John Wu, President Of Ava Labs:
“Once again we’re seeing the crypto markets’ resilience to this kind of posturing. This is just the latest installment in a pattern of monetary authorities calling for a ban of crypto, and either seeing no further action or reversing their stance in the near future.”
Bitcoin Shrugs Off Russia Crypto Ban Fears As BTC Price Nears $43.5K
A sharp uptick could have wider implications for the two-month Bitcoin price downtrend, one analyst reveals.
Bitcoin (BTC) surged on the Wall Street open on Jan. 20 as news that Russia was planning to “ban” cryptocurrency failed to impact price performance.
BTC Price Climbs $2,500 In 24 Hours
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD adding $1,500 over several hours on Thursday, continuing the upside move, which began with a bounce off $41,000.
At the time of writing, the pair was acting above $43,000, having reached highs of $43,468 on Bitstamp.
That peak represented an eclipse of resistance immediately above the $43,000 mark, and investors are now watching to see whether Bitcoin can hit higher targets.
“A weekly close just like this (i.e. above ~$43,100) would be enough for BTC to build on this early bullish momentum and move higher,” trader and analyst Rekt Capital argued in his latest Twitter update.”
“Still a few days left for the weekly close to confirm this but so far, so good.”
Bitcoin trying to break out of 2+ month-long downtrend pic.twitter.com/VaQynQgT05
— Will Clemente (@WClementeIII) January 20, 2022
Others zoomed out further, with fellow analyst William Clemente noting a possible breakout of a downtrend in place since early December.
The action came despite fresh desires to clamp down on Bitcoin and cryptocurrency more broadly from Russia’s central bank, with comments calling for a blanket ban on circulation and usage as well as mining.
Unlike similar announcements — and reiterations of those announcements — by China, the market was entirely unfazed by the plans, something which was not lost on pundits.
“Russia is looking to repeat the mistakes of China,” analyst and podcast host Scott Melker, known as the “Wolf of All Streets,” reacted.
A $34 million hack of trading platform Crypto.com likewise failed to dent enthusiasm.
Altcoins seize a chance to move
Optimism also extended to altcoins as Bitcoin moved up, with Ethereum (ETH), Solana (SOL) and Terra (LUNA) leading the top ten cryptocurrencies by market cap.
Russian Tech And Political Executives Denounce Crypto Ban Proposal
Telegram CEO Pavel Durov wrote that the proposed ban on crypto would “destroy a number of sectors of the high-tech economy” in a recent post on his massaging platform.
Russia’s recent ban on crypto has drawn criticism from a number of big names, including Alexei Navalny’s chief of staff, Leonid Volkov, and Telegram founder Pavel Durov.
On Thursday, Russia’s central bank published a report proposing a blanket ban on domestic crypto trading and mining. The report stated that the risks of crypto are “much higher for emerging markets, including Russia.”
However, it appears that this proposed ban isn’t universally accepted in the country. A Saturday post by Telegram founder Pavel Durov stated that the proposed ban on crypto would “destroy a number of sectors of the high-tech economy.” He added:
“Such a ban will inevitably slow down the development of blockchain technologies in general. These technologies improve the efficiency and safety of many human activities, from finance to the arts.”
While Durov conceded that the “desire to regulate the circulation of cryptocurrencies is natural on the part of any financial authority,” he concluded that “such a ban is unlikely to stop unscrupulous players, but it will put an end to legal Russian projects in this area.”
Leonid Volkov: Banning crypto Is “Impossible”
Meanwhile, in a Telegram post on Thursday, Volkov wrote that the ban would be like “calling a spade a spade.”
Navalny is an opposition leader in Russia and founder of The Anti-Corruption Foundation (FBK). In August 2020, he was poisoned with the nerve agent Novichok. After recovering in Germany, he returned to Russia in January 2021 where he was arrested and has remained imprisoned since.
In his announcement, Volkov referenced a Thursday report by Bloomberg. It claimed that Russia’s Federal Security Service (FSB) was instrumental in advancing the ban because crypto can be used to finance “non-systemic opposition and extremist organizations.”
He went on to add that he was “sure that the Bloomberg version, in this case, is 100% close to reality, but nothing will happen” because Russians are more likely to use crypto to buy drugs rather than donate it to the Moscow-based nonprofit FBK.
“Technically, banning cryptocurrency is the same as banning person-to-person transfers (i.e. it’s impossible)… Yes, they can make it very difficult to deposit funds on crypto exchanges, which means that intermediary services will simply appear that will do this through foreign jurisdictions. Yes, transaction costs will rise. Well, that’s all, I guess.”
Many of Russia’s neighbors have also taken a hard-line stance on crypto. On Wednesday, citizens in neighboring country Georgia were made to swear an oath to cease mining crypto. The governments of Kosovo and Kazakhstan have also recently been added to the list of countries that have banned crypto mining.
Perhaps one exception is the Russian neighbor Ukraine, which passed a number of laws to facilitate the country’s adoption of cryptocurrencies in September 2021.
Russia’s Finance Ministry Opposes Central Bank Call For Crypto Ban
The ministry believes Russia needs regulation, not a blanket ban, an official said.
Russia needs to regulate cryptocurrencies, not ban them, according to the head of the financial policy department at Russia’s Ministry of Finance, Ivan Chebeskov.
Chebeskov said the ministry opposes the stance of the Bank of Russia, which earlier this month issued a report calling for a full ban on cryptocurrency trading and mining. Chebeskov spoke during a conference on cryptocurrencies held by Russian publication RBK on Tuesday.
“We need to regulate, not ban,” Chebeskov said “Regulation is sufficient to protect our citizens.”
The Ministry of Finance has prepared a set of proposals and is waiting for the government to evaluate it, he said. Banning crypto transactions and mining would mean undermining the industry’s technological development, Chebeskov said. “We need to let these technologies develop.”
The Bank of Russia’s report on cryptocurrencies called them a threat to the country’s economic stability. The report suggested banning cryptocurrency trading and mining, as well as introducing a punishment for violating the already existing ban on using crypto for payments in Russia. The bank is waiting for feedback on the report until March 1.
Bloomberg reported that Bank of Russia Governor Elvira Nabiullina was successfully lobbied by the FSB, Russia’s powerful security service, which had been concerned by the use of cryptocurrencies by members of the political opposition in Russia.
Russian Finance Ministry Submits Crypto Regulatory Framework For Review
The ministry envisions crypto users executing transactions through banks and proposes to distinguish between qualified and unqualified holders.
In a new twist of the Russian crypto regulation saga, the country’s Ministry of Finance has come forward with an initiative that stands in stark contrast with the central bank’s hardline position.
The Central Bank of Russia recently called for a ban on crypto trading and mining activities throughout the country. Citing volatility, environmental impact and use in illegal activities, the central bank published a report calling regulators to implement a total ban and impose strict sanctions on violators.
However, the proposal received opposition from the Russian Ministry of Finance. A few days after the central bank’s call for a ban, Ivan Chebeskov, an official from the ministry, stated that the government should regulate crypto instead of banning it entirely.
Chebeskov said that the authorities should provide an opportunity for the industry to develop and that a complete ban may result in Russia falling behind on the technology.
On Thursday, RBC reported that the ministry has sent a letter to Dmitry Chernyshenko, deputy chairman of the government of the Russian Federation, and officially submitted a regulatory proposal to the government.
The proposal introduces a new framework for crypto use in the country that suggests crypto operations be done within the traditional banking infrastructure, with mechanisms in place to identify traders’ personal data.
According to the ministry, regulating crypto can bring multiple benefits, such as increased tax revenue and enhancing law enforcement’s ability to track criminal activity.
The ministry cites statistics showing that Russian citizens are holding crypto that’s worth around 2 trillion Russian rubles, adding that a total ban or a lack of regulation will eventually undermine the industry and create a black market.
Telegram founder Pavel Durov also reacted negatively to the proposed ban on crypto. The tech executive expressed that a ban may not stop “unscrupulous players” but will affect compliant and legal blockchain projects. He added that a ban will delay the development of blockchain-based technologies.
Meanwhile, Russian President Vladimir Putin highlighted some benefits to crypto in a meeting with government officials. “We also have certain competitive advantages here, especially in the so-called mining,” Putin said. The president then called on the government and the central bank to reach a consensus on the matter.
Ban Less Likely? Putin Says Crypto Mining Has Its Advantages In Russia
Putin says that a surplus of electricity and well-trained personnel give Russia a “competitive advantage” in crypto mining.
Russian President Vladimir Putin has given crypto enthusiasts a glimmer of hope for the future of digital assets in the country, which have been under threat from a recent push to ban cryptocurrencies and mining.
The strongman leader opened a Wednesday video conference with members of the Russian government by saying he would like to “start with an issue that is currently in the spotlight — the regulation of cryptocurrencies.”
“Of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.”
According to analysts in spring 2021, the price of electricity in Russia was $0.06 per kilowatt-hour for household use and $0.08 for business. To compare, in France, 1 kWh of electricity costs $0.2 for householders and $0.14 for business, which is four times more expensive than in Russia.
He also called on the country’s central bank to meet with his government in the near future so that they might come to a consensus on the use of crypto.
Last Thursday, Russia’s central bank published a report proposing a blanket ban on domestic crypto trading and mining. The report stated that the risks of crypto are “much higher for emerging markets, including Russia.”
Russia’s central bank has had concerns regarding crypto for some time now. In December 2021, Central Bank of Russia governor Elvira Nabiullina said, “We cannot welcome investments into cryptocurrencies.”
On Wednesday, Russian Finance Minister Ivan Chebeskov responded with opposition to the proposed blanket ban, calling for regulation rather than restriction. He highlighted that a ban on crypto would cause the country to fall behind the worldwide tech industry.
“We need to give these technologies the opportunity to develop.”
Meanwhile, Putin assured his parliamentarians that “the Central Bank does not stand in our way of technical progress and is making the necessary efforts to introduce the latest technologies in this area of activity.”
Despite these assurances, Putin conceded that expanding the use of crypto “carries certain risks,” given its “high volatility.”
While Russia’s central bank has been skeptical of crypto for quite some time, Putin’s opinion has remained somewhat unclear. In November 2021, he pointed out that crypto is “not backed by anything, [and] the volatility is colossal.”
Back in 2020, the central bank announced that it was studying the possibility of a digital ruble, with prototype testing planned for this month.
In a recent post on his messaging platform, Telegram CEO Pavel Durov wrote that the proposed ban on crypto would “destroy a number of sectors of the high-tech economy.”
Russia Values Local Crypto At $200 Billion As Rules Near
* Russian Holdings Are 12% Of World Total: Government Estimate
* Bank Of Russia, Goverment At Odds On How To Regulate Market
Russians own more than 16.5 trillion rubles ($214 billion) worth of cryptocurrencies, according to an estimate the Kremlin and government officials are using to craft a plan to regulate the industry.
That figure — equivalent to about 12% of the total value of global holdings, or a third of the market capitalization of Russia’s benchmark stock index — helps explain why the government sees more value in regulating the sector than imposing an outright ban.
The estimate was calculated last month by analyzing the IP addresses of the biggest crypto-exchange users as well as other information, according to two people working on the proposals with the government and the Kremlin who asked not to be identified because they aren’t finalized.
To be sure, there’s a wide range of estimates for how much crypto Russians hold due to the decentralized nature of the investments. The head of the lower house of parliament’s financial markets committee Anatoly Aksakov in December cited data that Russians owned cryptocurrencies worth about 5 trillion rubles, according to the Tass news service.
Alexander Filatov, co-founder and chief executive officer at blockchain developer TON Labs, said he wouldn’t be surprised if the government figure was accurate.
“Russians really do have a lot of money in cryptocurrency, but it’s hard to value the true amount,” he said. “Many people are using cash, derivative instruments, or have two passports and can open a crypto wallet in someone else’s name.”
The statistics offer a snapshot of how widespread crypto investing has become in the world’s third-biggest Bitcoin miner as officials at the central bank push for a sweeping ban on the local industry, while the government pursues a softer approach.
More than 17 million Russians, or about 12% of the total population, are cryptocurrency owners, according to data from the Singapore-based tripleA payment gateway. Sixty percent of local crypto investors are aged between 25 and 44, while more than 500,000 local computer programmers work in the industry, according to the people involved in the discussions.
A representative of Deputy Prime Minister Dmitry Chernyshenko, who oversees the digital economy, said the government estimates over 17 million Russians hold crypto but declined to value their total holdings when contacted by Bloomberg.
Bitcoin, the world’s most valuable cryptocurrency, was little changed at at $38,436.23 as of 6:38 p.m. on Tuesday in Moscow, after rising as much as 1.7% earlier in the day.
The 16.5 trillion ruble estimate could actually be on the low side because some traders conceal their activities using virtual private networks, the people said. After its recent slump, the global cryptocurrency market is currently worth about $1.75 trillion dollars, according to CoinMarketCap.
Riding The Hype
“The Russian crypto scene is growing and there are more and more investors coming in,” said Stanislav Koritsky, host of the investBRO podcast and a crypto investor since 2017. “Many of them are young people who don’t understand the market and jumped in amid all the hype.”
With the government and the Bank of Russia at odds on the future of cryptocurrencies in Russia, President Vladimir Putin has called on authorities to find a regulatory compromise.
The central bank — which puts the annual value of crypto trading in Russia at $5 billion — wants mining and trading shut down, saying it poses a threat to Russia’s entire financial system.
The government, meanwhile, is mulling a raft of rules that include limiting trading to Russian banks, simplifying the process of blocking foreign crypto-exchange sites, and giving non-residents access to legitimate local exchanges, according to state-owned newspaper Rossiyskaya Gazeta.
While Russia’s security services were said to be pushing the central bank for a total ban of cryptocurrencies on the grounds that they could be used to fund opposition parties, they have since switched to supporting the regulatory approach proposed by the government, the people said.
Russian Government And Central Bank Agree To Treat Bitcoin As Currency
Cryptocurrency transactions of more than 600,000 rubles (roughly $8,000) will have to be declared; otherwise, it could be considered a criminal act.
The government and central bank in Russia have reached an agreement on how to regulate cryptocurrencies, according to a Tuesday announcement.
Russia’s government and central bank are now working on a draft law that will define crypto as an “analogue of currencies” rather than digital financial assets set to be launched on Feb. 18. Cryptocurrencies would function in the legal industry only if they have complete identification through the banking system or licensed intermediaries.
Kommersant noted that Bitcoin (BTC) transactions and possession of cryptocurrency in the Russian Federation are not prohibited; however, they must be done through a “digital currency exchange organizer” (a bank) or a peer-to-peer exchange licensed in the country.
The report also highlights that cryptocurrency transactions of more than 600,000 rubles (roughly $8,000) would have to be declared; otherwise, it could be considered a criminal act. Those who illegally accept cryptocurrencies as payment will incur fines.
This news comes after months of speculation about how the Russian government will handle digital currencies. While it is still unclear what this decision will mean for businesses and citizens in Russia, it seems that the country is slowly warming up to the idea of cryptocurrencies.
In January, the Bank of Russia called for a nationwide crypto ban in a report that warned about the speculative nature of the industry. The bank also stated that financial firms should not facilitate crypto transactions as part of that proposal to ban digital assets.
However, the proposal generated opposition from the Russian Ministry of Finance. A few days after the central bank’s call for a ban, Ivan Chebeskov, a ministry official, said that the government should regulate crypto rather than prohibiting it entirely. He warned that a total ban might result in Russia falling behind in technology.
Reports have also emerged that President Vladimir Putin supports efforts to regulate the country’s crypto mining sector.
Russia To Regulate Crypto, Dispelling Fears Of Ban
The government’s plan to license exchanges and tax large transactions has the support of the central bank, which previously wanted to outlaw mining and trading.
Instead of banning cryptocurrencies, the Russian government has decided to regulate them, legitimizing a $2 trillion asset class in the world’s 11th-largest economy.
A document setting the principles for the regulation of cryptocurrencies appeared on the government’s official website on Tuesday night. Notably, the plan has the support of the central bank, which had called for a ban on crypto mining and trading.
This is the second major regulatory cloud to have been lifted from the global crypto market in a month. India last week took a step toward legalization with a tax on digital asset transfers. While it carries a hefty rate (30%), the tax was seen by many as putting the fifth-largest economy on track toward legitimizing crypto.
In Russia (population 144 million), residents own over 12 million cryptocurrency accounts and about 2 trillion rubles ($26.7 billion) worth of crypto, according to the government’s document (PDF in Russian).
It says the country ranks third in the world in bitcoin mining, a share the Cambridge Centre for Alternative Finance agrees with.
With such a large volume of crypto, law enforcement agencies are concerned they can’t adequately approach crimes involving crypto, the document said.
Yet, it stopped short of the draconian measures suggested in January by the Bank of Russia. The central bank’s report called cryptocurrencies a threat to Russia’s financial stability and rife with fraud. The regulator suggested banning cryptocurrency trading in Russia, as well as mining.
Instead, Russians would have access to the digital ruble, the central bank digital currency in the works by the Bank of Russia, and digital assets issued inside the country by licensed companies.
By contrast, the government’s blueprint released Tuesday says cryptocurrency purchases in Russia may take place, but only through locally registered and licensed companies so that users are fully verified and information about their transactions can be made available to government agencies. The document does not address cryptocurrency mining. Many of the stipulations require parliament to pass new laws.
Chain Analysis, But No Chainalysis
All crypto-related transactions bigger than 600,000 rubles would have to be reported to the Federal Taxation Service. Failure to do so should be considered a felony, and using cryptocurrency to conduct a crime should be an aggravating factor, the report said.
The proposal suggests allowing banks to operate as intermediaries between users and cryptocurrency exchanges. The institutions would need to verify users’ identities, check transactions for signs of illegal activity, provide rails for fiat transfers and keep information about transactions for at least five years.
Banks should also provide users the documents necessary to report their taxes, and government agencies data about transactions on the request.
Cryptocurrency exchanges and peer-to-peer marketplaces would have to register as legal entities and join an official register of digital-currency exchange operators. They would have to open a crypto account with an authorized bank and satisfy certain requirements applying to traditional financial organizations. Foreign exchanges would be required to have an office in Russia and be registered there.
Banks working with crypto exchanges would be required to use the Transparent Blockchain transaction tracking tool developed by Rosfinmonitoring (Russia’s FinCEN equivalent) not products from foreign companies like Chainalysis, Elliptic or Crystal Blockchain.
According to the document, Transparent Blockchain can help identify owners of cryptocurrency wallets using open-source data, as well as information from the darknet, detect patterns of illegal usage of crypto and serve as a register of addresses related to crimes and terrorism financing.
According to the announcement, the proposal was agreed on by the Bank of Russia, Ministry of Finance, Ministry of Economic Development, Federal Taxation Agency, anti-money laundering watchdog Rosfinmonitoring and the key law enforcement bodies: Ministry of the Interior, Federal Security Service and the Prosecutor General’s office. Earlier, the Bank of Russia had been a dissenting voice.
According to the newspaper Kommersant, the approach puts cryptocurrencies on a level with foreign currencies, which are regulated in a similar fashion. The new laws and directives are likely to come into force in the second half of 2022 or early 2023, Kommersant said.
Bitcoin’s price rose about 3% Wednesday morning in the U.S. Russia’s embrace might be having “some level of influence” on the bellwether cryptocurrency’s price, said Armando Aguilar, an independent crypto analyst.
Other market factors including KPMG Canada adding BTC to its balance sheet and the U.S. Justice Department’s recovery of $3.6 billion in bitcoin from the 2016 Bitfinex hack could also be buoying prices, he said.
“We could see other governments adopting BTC in the near future with Russia making the move,” Aguilar told CoinDesk in a Telegram message.
Anto Paroian, chief operating officer at digital assets investment firm ARK36, said Russia’s move “reflects a broader shift in regulatory attitudes towards these assets in various jurisdictions around the world.”
“The political and economic cost of banning” crypto will outweigh the risk to governments from allowing it to “coexist with legacy financial institutions,” Paroian said.
In his newsletter Wednesday, crypto investor and blogger Anthony Pompliano noted that U.S. President Joe Biden’s threat of sanctions against Russia – including cutting off the country’s economy from much of the global financial system – might reinforce the case for bitcoin as “censorship-resistant money.”
“It is weird that the central bank of Russia started to question bitcoin’s relevance in the country at the same time that it may become incredibly important to the nation state,” Pompliano wrote.
Similarly, Marcus Sotiriou, analyst at the U.K-.based digital-asset broker GlobalBlock, said in an email that “aside from the huge tax revenue, Russia could be using bitcoin to hedge against aggressive U.S. foreign policy.”