Known for its long history of ethical trading and regulation, Russia has waded into the ongoing debate surrounding crypto currency markets. It has been reported that the country’s Deputy Prime Minister, Yuri Trutnev, claimed the Russian Federation Central Bank has approved the first cryptocurrency trading platform for private investors, a system called “Voskhod”.
“We are considering the possibility of creating a platform for trading with cryptocurrencies. The central bank has supported us,” explains Trutnev in his interview.
Trutnev also speaks about Bitcoin mining and the possibility of partnerships with the country’s energy sector. Two of the nation’s energy companies, Evrosibenergo and Gazprom, are in discussions around possibly partnering with local Bitcoin miners.
“There is no way to redistribute this surplus to other regions, so you can create companies that will thus dispose of unconnected volumes of electricity, and people will be able to earn on this,” Trutnev adds.
Russia and ICOs – Mining and Energy Companies
Russia has an over-supply of electricity generation within the country. Their aging infrastructure network means that they struggle to monetize this resource or sell it effectively. Cryptocurrency mining requires huge quantities of electricity which is plentiful and cheaply available. In many ways mining can monetize this resource and possibly encourage investment in mining operations within Russia, boosting their economy. Russia could choose to influence and control this emerging market as they struggle to move away from their dependency on commodities for economic growth and revenues.
Given Russia’s history of corruption in politics and commodities such as oil, it is ironic that they would support legalization and regulation of Crypto currency trading via an exchange mechanism. Or have they?
Russia and ICOs – Have They Really Made a Decision?
In an apparent contradiction, the Central Bank of Russia issued an official statement on Monday this week regarding digital currencies. The bank’s press release states that:
“Operations with crypto-currencies carry high risks both during exchange operations, including due to sharp exchange rate fluctuations and in the case of raising funds through the ICO (Initial Coin Offering – a form of attracting citizens’ investments in the form of issuing and selling new crypto currency to investors/tokens). There are also technological risks when issuing and handling crypto-currencies and the risks of fixing the rights to “virtual currencies”. This can lead to financial loss of citizens and to the inability to protect the rights of consumers of financial services in the event of their violation.”
Citing the anonymous nature of the issuance of cryptocurrency, Russia is strongly linking cryptocurrencies to illegal activities, including money laundering and terrorist financing. Unlike China, which has issued a statement banning ICOs, Russia is highlighting their high-risk status and reiterating that these are not considered financial tender or financial instruments in Russia for trading on their exchanges.
Watch this space for the next about face as Russia struggles to leave its history of corruption behind or come up with a clear policy framework to address this emerging market.
Russia and ICOs