Yesterday, the Central Bank of Russia stated that it will monitor all inter-personal remittances of credit institutions from 2022, mainly to combat online gambling and cryptocurrency fraud. It also plans to start CBDC pilot work after the January holiday and said it plans to ban cryptocurrencies across the board.
The Russian government recently stated that provinces are free to set higher electricity rates for crypto miners. Members of its State Duma (the lower house of the Russian Federation Assembly) stated that progress will not be made until February 2022 at the earliest in the Russian cryptocurrency law. This cryptocurrency law legalizes cryptocurrency by collecting taxes.
In this way, the central bank and government departments have completely different attitudes towards cryptocurrency. Why is this happening?
Contrary views have led to repeated delays in the encryption bill
In 2017, Russian President Vladimir Putin stated that the main risk of cryptocurrency is its use in crime. Proposed regulations regarding cryptocurrency and initial coin offering (ICO) were announced in December.
In January 2018, the Ministry of Finance first proposed the “Regarding Digital Financial Assets” bill, which included the definition of cryptocurrency, etc., and corresponding regulations. The draft was submitted to the State Duma on March 16th that year.
The bill was originally scheduled to be passed in July, but the first reading review began in May, and the second reading review was postponed to December. However, at the end of November, news broke that the bill returned to the first reading and review, and major changes will be made to delete the definition of cryptocurrency mining and other definitions, and it will be postponed to April 2019.
In January 2020, the Central Bank stated that the ruble is the only legal tender of the Russian Federation. The regulator also stated that private cryptocurrency cannot be equivalent to legal tender, nor can it be legal tender, and will support it if legislation prohibits cryptocurrency.
In February, the central bank issued a series of tradable rules, and any transaction related to cryptocurrency was classified as a transaction category with “potential money laundering risk”. And in the newly revised standard for freezing accounts, encrypted assets are specifically mentioned.
In March, a person in charge of the legal department of the Russian Central Bank stated that a cryptocurrency law, the “Digital Financial Assets Act”, is being proposed, or that the issuance and circulation of cryptocurrencies will be prohibited. He also said that the central bank does not recognize institutions that issue cryptocurrencies and cannot restrict bitcoin transactions.
In May, a draft was submitted to prohibit the issuance and all activities involving cryptocurrency in Russia, and individuals and companies will not be allowed to accept cryptocurrency as a payment method. Those who already hold cryptocurrency need to register with the tax bureau and explain its source. There is another draft that proposes to add content related to digital currencies in the criminal law.
This is called the most stringent draft in Russian history, because the above content means that encrypted transactions will be subject to strict supervision, and violations will be punished, such as huge fines and even imprisonment.
In June, the Deputy Minister of Finance confirmed at the meeting that cryptocurrencies can be traded on exchanges. He also said, “In theory, it is feasible. As long as they are properly regulated.”
In July, the State Duma passed a bill stating that digital currency is regarded as a property, but not as a method of payment. The new cryptocurrency law will take effect on January 1, 2021.
In short, the official policy has been oscillating between legal and prohibition. Although the law has not been determined, time flies and the crypto market develops again.
In February 2021, senior officials of the Ministry of Finance stated that the digital ruble may be the Russian currency more global.
While the central bank does not recognize cryptocurrencies, it promotes the issuance of digital rubles. Regarding the latter, the governor of the central bank revealed it in 2019.
Then the State Duma approved the cryptocurrency taxation bill. According to the bill, if the total annual transaction volume exceeds 600,000 rubles ($8,100), the listed entities will have to report their encrypted transactions.
In May, legislators drafted amendments to allow cryptocurrency payment contracts.
The main contradiction is that the central bank does not recognize cryptocurrency, but lawmakers hope to legalize cryptocurrency through taxation. The two parties have been unable to reach an agreement, causing the passage of the bill to be repeatedly delayed. Therefore, news came out in December that Russia will make a decision on whether to legalize the crypto market in 2022.
Since no agreement can be reached, how is the market developing?
The Russian crypto market continues to grow and develop
On December 25, 2021, the Russian government stated that provinces are free to set higher electricity rates for crypto miners. Prior to this, the demand for encrypted mining machines has surged, and sales have also soared. The chairman of the Russian Financial Commission stated that Russians have invested 5 trillion rubles (about 67.44 billion U.S. dollars) in cryptocurrencies.
Although the national bill is not yet clear, it can be seen that the market has grown continuously, and the bill has gradually changed from an initial attitude of rejection to approval.
In 2017, the U.S. Treasury Department’s Financial Crimes Enforcement shut down a crypto exchange called BTC-e because it involved money laundering of $4 billion in cryptocurrency transactions. This exchange was established in 2011.
According to estimates by a researcher, as of 2016, up to 70% of global cryptocurrency crime cases involved BTC-e. The theft of funds from the bankruptcy of Mt.Gox is also related to it.
After the Russian entrepreneur Alexander Vinnick behind BTC-e was arrested, another partner launched another exchange, WEX, which later went bankrupt due to the missing of more than $400 million in cryptocurrency. But it is said that the Russian FSB is related to the disappearing cryptocurrency.
In March 2019, there was also news that members of the Russian FSB tried to collect US$1 million in BTC bribes from media tycoons. This is the part that is enforced, and of course, there are also encouraged companies.
Russian FSB badge
In March last year, there were media reports that Vladimir Potanin, CEO of the rich Russian Norilsk Nickel, said that the central bank had approved his company to operate cryptocurrencies based on the blockchain platform. “To a certain extent, Russia seems to be ahead of many other jurisdictions in terms of digitalization. The central bank has given us extensive authorization.”
Moreover, he revealed in an interview with the media in 2019 that they are developing cryptocurrency on the Hyperledger blockchain network. There are also local media reports that the central bank is conducting a four-month test of his blockchain network.
In October 2018, a survey showed that more and more citizens and companies in Russia are making money in the crypto industry, and about half of the local ICO projects and cryptocurrency companies use digital assets to settle their wages. In addition to Bitcoin, Russian employees also like Ethereum and Ripple as salaries. At the same time, it also mentioned that young people and men are more willing to accept work and give out cryptocurrency.
A survey conducted in December showed that more than 90% of people said they want to pay with cryptocurrency, and 25% have adopted cryptocurrency as their main payment method. 40% of participants viewed cryptocurrency as a very good long-term investment.
At the time, it was also revealed that Russia’s largest encryption mine was in the Leningrad region, covering an area of about 4,000 square meters, more than 3,000 mining machines, and a total investment of 500 million rubles (US$7.3 million).
In August 2020, the Russian Financial Supervisory Authority budgeted 14.7 million rubles (200,000 US dollars) to establish a detection tool that tracks the liquidity of digital assets and maintains database queries for cryptocurrency wallets involved in illegal activities.
On October 14, 2021, although Russians cannot use digital currency to pay in their own country, they can freely use encrypted wallets abroad. In December, Russia closed several encryption mines.
According to Chainalysis report data, the United States and Russia will lead the way in the total amount of cryptocurrency money laundering in 2020. In addition, Russian President Putin also ordered a crackdown on illegal cross-border transfers of digital assets in March.
Although there have been investigations and crackdowns, the overall market is developing upwards, and the economic development issues involved in money laundering and illegal cross-border transfers mentioned at the end are important reasons for supervision.
Economic constraints, looking back at Russia’s national conditions
In 1991, Russia inherited the mantle after the disintegration of the Soviet Union, including its international status, military power, and nuclear weapons. Although it is a succession, the overall strength is quite different, especially the economy.
The GDP of the year of disintegration was 517.9 billion U.S. dollars, accounting for 2.16% of the world’s total, and the tenth in the world. Later, shock therapy was implemented. The main policies were economic liberalization, economic privatization, and economic stabilization, but they did not work.
Eight years later, GDP is 195.9 billion U.S. dollars, accounting for 0.6% of the world’s total, the 22nd in the world. The economy is declining and the ruble depreciates. The GDP in 2008 was US$1.66 trillion, accounting for 2.6% of the world’s total, and ninth in the world.
GDP in 2020 is 1.47 trillion U.S. dollars, the 12th in the world. The data doesn’t look bad, and it’s among the best in the world.
Russia’s GDP data for the past three years
In 2020, my country’s Guangdong Province’s GDP is 11.07 trillion yuan, and Russia’s GDP equivalent to RMB is 9.5 trillion. Comparing the two, Russia’s GDP is lower than that of Guangdong.
At first, the only thing that could stand against the United States after World War II was the Soviet Union, and Russia, which had inherited its mantle, continued to “confront.” In addition to its own development factors, this is a major factor affecting economic development.
Especially after the Ukrainian referendum event in 2014, Crimea broke away from Ukraine and merged into Russia. As a result, Europe and the United States have imposed multiple sanctions on Russia, involving military and economic aspects.
In 2018, Russia’s foreign trade totaled US$687.5 billion, while the United Kingdom reached US$1.15 trillion. Germany’s exports alone reached US$1.31 trillion. The sanctions have largely affected Russia’s development, because the U.S. dollar settlement system cannot be used.
Of course, Russia has also taken countermeasures and actively circumvented the U.S. dollar, including selling U.S. debt, stopping the use of U.S. dollars to settle crude oil, and actively seeking allies.
In addition, due to the impact of the epidemic, the outflow of capital from Russia has increased. According to data from its National Bureau of Statistics, in the first eight months of 2021, outflows of capital reached 51 billion U.S. dollars, twice the amount in 2019 and exceeding the one-year outflow level in 2020.
Although President Vladimir Putin once stated that he would exempt capital for three years, as long as he returns capital to Russia during this period, he will no longer be held accountable and no additional taxes will be levied, but the results have been minimal.
In addition to the cryptocurrency money laundering mentioned earlier, these are likely to change Russia’s attitude towards the encryption bill. If the economy wants to develop, that means making money and making money.
Moscow does not believe in tears, but also does not believe in cryptocurrencies
2022 is about to come, and the Russian encryption bill will be finalized. This is part of economic development, not the core.
Even if Russians invest a lot in cryptocurrency, more and more people are willing to accept cryptocurrency, but relatively speaking, its volume needs to be improved.
Russia, which has a fighting nation, is like Moscow not believing in the meaning of tears. They believe in themselves, so naturally they will not bet all on cryptocurrency. Just like Wang Xiaobo said, although the years have flowed and everything will pass, there is always something happening that cannot be erased.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/doesnt-moscow-believe-in-tears-that-believe-in-cryptocurrency/
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