Another country is tepid about blockchain. Russia.
The war-torn country, led by a pathologically self-centered leader, appears to have scrapped plans to set up a state-owned cryptocurrency exchange, according to field reports posted on Twitter. Russian parliamentarian Anatoly Aksakov has reportedly said that he plans to put in place rules to allow the private sector to operate cryptocurrency exchanges.
Plans for a state-owned cryptocurrency exchange could be dated back to 2022, when President Putin signed a bill banning payments using domestic crypto assets. At the time, Russia’s parliament and central bank were bogged down in debates over whether to regulate crypto-assets or ban them outright as the central bank wanted.
Since then, the Russian government has considered introducing an “experimental legal regime” that would allow cryptocurrencies to be used in import and export transactions, leaving cryptomining and international cryptocurrency payments to “special agencies.” . Russia has also become more open to the idea of using stateless currencies and permissionless stablecoins such as Bitcoin (BTC) to evade international sanctions.
Russia’s abandonment of plans for a state-owned cryptocurrency exchange to allow closely monitored private companies to enter appears to be a perfect symbol of the pervasive nepotism that took root in the post-Soviet era. Moreover, this policy shift is also a prime example of Russia’s strange stance on crypto.
It is also surprising that dictatorships change their attitudes toward crypto assets, a technology that makes middlemen and dictators unnecessary. Putin implemented capital controls at home to support a weakening ruble, which also influenced his decision to ban crypto assets. On the other hand, there is also the aspect of trying to use crypto assets to show off their power overseas. Uncontrolled crypto assets are a double-edged sword for Russia.
use or prohibit
Crypto-assets occupy an interesting position in the world of international politics. Russian citizens have used Tether (USDT) and other stablecoins to move money in and out of the country. Still, by and large, neither the US nor the EU seem too concerned about cryptocurrencies being used to evade sanctions.
It seems only recently that Russian leaders have begun to understand that the use of cryptocurrencies is inevitable and that regulation is better than banning them. In particular, the de facto separation of Russia from the US dollar-based international economic infrastructure further encourages such recognition.
Oleg Ogienko of Russian mining giant BitRiver praised the Treasury Ministry’s decision to scrap plans for a state-owned cryptocurrency exchange because it “minimizes the risk of sanctions.” Interestingly, he also said that in a country as famous for oligarchs as vodka, private cryptocurrency exchanges “eliminate the possibility of market monopoly”.
It is not yet known which cryptocurrency exchanges will be allowed to operate and what internal controls must be followed. The Russian newspaper Izvestia reported that the central bank will “probably” oversee the crypto platform. The competent authority could be the Ministry of Finance. It goes without saying that Russian cryptocurrency exchanges will not engage with American citizens or most of the rest of the world.
Cryptoassets have undoubtedly become an increasingly useful tool for citizens around the world who want to protect their assets from volatile national currencies and government seizures. Yet the industry poses little threat to the current order. Cryptoassets tend to make exaggerated promises and not actually deliver the expected results. This is especially true when it comes to undermining state power.
What is the value of crypto assets
Instead, blockchain has become one of the most powerful financial investigative tools available to governments. Cryptocurrencies are one reason why North Korea can estimate how much money North Korea makes from ransomware and internet attacks, and how American law enforcement can catch big-time drug dealers in the digital age.
Crypto assets represent a small percentage of global crime, but all blockchain-related crimes have the potential to become honeypots.
More importantly, crypto’s success in empowering individuals is why it’s not a threat overall.
If Russia really thinks crypto will be used on a large scale to evade capital controls, then understand the UX/UI issues that are preventing millions from fully participating in the crypto economy. Either they don’t, or they don’t realize that it’s possible to thoroughly manage the onramp to crypto.
Cryptocurrency can be a surprisingly powerful tool for good guys and bad guys alike if you know it all and want to evade prying eyes, but for the rest of us, it’s just a popular payment method. It’s just an inconvenient version of the app.
Crypto assets primarily function as symbols. It is a symbol strongly influenced by individual freedom and self-reliance, the pole of the American ideal. It is sad that Russia is gradually becoming more lenient while the US seeks to kill such crypto assets.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original: Should Russia Bolster or Ban Bitcoin?