Russia Becomes More Crypto-Friendly as its CBDC’s Launch Date Approaches
Russia has had quite a peculiar history with the emerging crypto space. The country was ostensibly interested in the technology behind this innovation, as Vladimir Putin, back in 2017, met with the Ethereum creator and conversed regarding the opportunities the blockchain technology can implement.
However, circumstances got rough as the Russian Central Bank First Deputy Governor called cryptocurrencies “dubious” and asked for a complete ban of the tokens in the country. In 2020 though, Russian lawmakers approved legal status for cryptocurrencies that authorized possession, acquisition, and transfer of these tokens legal, yet not allowing for using them as payment.
Russia & Cryptocurrencies: A Cooperative Start
Russian officials, especially its president Vladimir Putin, had a very promising entrance to the crypto world. In a private CEO meeting, Vitalik Buterin spoke to the Russian president regarding the possible use of blockchain technologies in the Russian Federation. Reportedly, Putin supported the idea.
Things got more encouraging when the “Ethereum Russia” agreement took place. Ethereum Russia was a collaboration agreement with an aim to provide education, events, and architecture review for VEB, as well as providing support to the development of a new center for blockchain research at the Russian National University of Science and Technology (MISIS).
To add to the mix, as political conflicts between the U.S. and Russia in 2018 intensified, the possibility of Russia being banned from the SWIFT system increased. SWIFT currently links more than 11,000 banks operating in at least 200 countries, such a ban would have taken all of this from Russia, potentially ruining international trading opportunities.
At this time, reports came claiming Russia with the other intensely sanctioned country—Iran—consider cryptocurrencies to counter US sanctions and reduce their dependence on the US dollar.
Crypto Ban in Russia
Russia, in the same year as it unveiled the “Ethereum Russia” agreement, revealed its intentions of blocking cryptocurrencies, which was very strange considering their irenic relationship with this innovation. Officials called these assets “dubious” and stated mainstream should not be able to access them.
Such a big change in behavior should have had more serious roots than just cryptos being “dubious.” While officials didn’t assert further information, it can be assumed that cryptocurrencies emerged as an opponent to the Russian Central Bank and its upcoming CBDC—Digital Ruble.
Nevertheless, the country approved a more considerate law for cryptocurrencies in 2020, allowing for their possession, acquisition, and transfer, though not for use as a payment method. Now, according to the latest updates, Russia will permit the use of cryptocurrencies for payment.
Russia Loosens Regulations as their CBDC will Launch this Year
According to a recent report, the Chairman of the Russian Duma’s Committee, Pavel Krasheninnikov, announced that cryptocurrencies can be used as a “contractual” means of payment in the country, partially lifting the crypto payment ban. He stated:
We believe that it is necessary to make amendments to the Civil Code, the initiative is currently undergoing a necessary approval procedure. Currently, there is an understanding that digital currency is not legal as payment but this payment method, quite possibly, can be contractual.
The news comes right after sources confirm Russia’s plan to release a digital prototype of the national fiat (digital ruble) by the end of 2021. Russia has been working on its CBDC for four years now, dating back to 2017 when the country unveiled its plans for creating digital money.
The fact that Russia is becoming more crypto-friendly as the launch date of its CBDC is approaching can’t be coincidental. It can be argued that Russia wants to promote cryptocurrencies which are a form of digital money so that more people make acquaintance with this emerging payment method, and will more easily adapt the digital ruble when launched.
Russia is Leading in Cryptocurrency Adoption
According to a report by Fortune, Russia is the second leading country in cryptocurrency adoption right behind Ukraine. Over a 12-month period from July 2019 to June 2020, Russia sent $16.8 billion worth of cryptocurrency and received $16.6 billion. While the vast majority of these transactions account for legitimate activities, there are inevitably illegitimate activities included, too.
Russia also leads the world in the illicit use of cryptocurrency on darknet marketplaces and in ransomware schemes. The Russian darknet market, Hydra is the sixth-highest volume cryptocurrency service in the region, outranking popular (and legal) cryptocurrency exchanges including Kraken and BitMEX.
What do you think about Russia’s ever-changing stance on the issue of cryptocurrencies? Do you think Russia will allow cryptocurrencies to be used alongside its digital ruble? Let us know in the comments section below.