The die has been cast after anticipating the outcome for some time. After months of increasing tensions, Russia invaded Ukraine in large numbers earlier this week. Bitcoins’ (BTC), value plunged as a result. Many people are waiting for the West to announce harsh sanctions. Experts believe that Russia could use crypto to circumvent most of these sanctions.
Russia and Sanctions
It is likely that Russia will be the victim of severe sanctions after the West’s unprovoked invasion and occupation of Ukraine. This will attempt to isolate Russia and the West from it, with a particular focus on the financial sector.
The first round of new sanctions has been announced by the United States, Britain and EU. These will be much more severe than the ones in place since 2014 following Russia’s annexe of Crimea. However, President Vladimir Putin appears unaffected and the Russian government has not shown any concern.
Russia has taken a long time to consider this consequence. They have not yet mapped this exact scenario, which would be foolish. ”
The Russian Ministry of Finance presented the draft bill for cryptocurrency regulation on Monday. This was just days after the invasion of Ukraine.
This draft retains the existing ban on cryptocurrency payments for goods or services. It also places a limit on how many Rubles individuals can invest in crypto and limits crypto mining.
In February 2018, the Russian cryptocurrency market was worth more than $200billion, which is about 12 percent of global total market. The Russian government estimates that 5 billion transactions using crypto in Russia each year are made. Additionally, the country’s population of 144 millions owns approximately 26.5 billion of the cryptocurrency.
The Russian Central Bank demanded a complete ban on cryptocurrency in Russia. However, it was not implemented. The discussion was also attended by President Putin. While he acknowledged some of the dangers of cryptocurrency investing, he said that the Central Bank shouldn’t stand in the way technical advancement. Anton Siluanov, Finance Minister, anticipates that this law will be in force before the end 2022.
Crypto in Russia
It could be because Russia owns an asset which allows it to negate most Western sanctions. According to the New York Times, this asset is all about the cryptocurrency industry.
The impact on the Russian economy from the United States’ ban on Americans doing business with Russian oil and gas producers, banks and other businesses, following the invasion of Crimea by the United States in 2014 was devastating. According to economists, sanctions from the West cost Russia approximately $50 billion annually. The global marketplace for digital assets and cryptocurrencies has boomed since then. This is bad news for Russia’s sanctions enforcers, but good news for Russia. ”
Experts believe that it’s inevitable that Western sanctions would be abated by the adoption of Bitcoin and other cryptocurrency. Russia could be freed from all sanctions because cryptocurrencies have no borders.
Russia’s launch of its national cryptocurrency under CryptoRuble is another avenue Russia is looking into. When the first plans were announced, Sergei Glazyev, Putin’s economic advisor suggested that the introduction of the currency could help bypass Western sanctions.
In reality, the new digital currency will be nothing more than a digital Ruble. It is desirable that the government has its own crypto currency, which cannot be mined. The Russian government might also closely watch the usage of cryptocurrency.
Olga Skorobogatava (deputy governor of Russia’s central bank) and Alexey Moisseev, the deputy finance minister, stated that there is no immediate need to accept this cryptocurrency. However, the situation may change and officials could take the lead in accelerating the development of CryptoRuble.
Projects dating back to 2015
In 2015, the subject was extensively discussed. Qiwi, a payment processor, had already suggested the possibility of creating a Russian national cryptocurrency. Qiwi spoke then about BitRuble.
Russia currently has an official working party that investigates the potential risks and recommends regulations if this plan is to be implemented.
There have been instances in the past of cryptocurrency being blocked. The stance appears to be reversed today, with more emphasis on regulating digital currency.