Asian countries are paradoxical when it comes to cryptocurrency. Though most of them are far away from regulating digital currencies, they are actively using it. China has actively rejected Bitcoin’s legality but has continued to boost the currency’s volumes and prices in phases. The Southeast Asian countries account for a good chunk of the global remittance industry. They have begun using Bitcoin for instant cross border transfers which otherwise generally involve high third party charges. Now that Bitcoin transactions are on the rise, Russia has decided to regulate Bitcoin despite previously challenging the digital currency’s legality. Let’s dive deep into why and how Russia is planning to monitor Bitcoin.
Russia and Bitcoin
In recent years, Russia has showcased an alternating personality when it comes to Bitcoin. While at times Russia’s central bank admired the numerous advantages of a cryptocurrencies, they have also been hands off and cynical when it comes to adopting them. In 2014, Russian authorities issued warnings against Bitcoin citing uses like money laundering and financing terrorism before declaring the use of Bitcoin as illegal. They were even considering an outright ban of cryptocurrency in the country punishable by jail time for holding any bitcoins. By May 2016, Russia’s central bank revealed plans to create its own cryptocurrency banning the existing ones. However, the air cleared when a federal tax service letter released in December of the same year implied that cryptocurrencies are not illegal and are yet to be regulated.
Plan to acknowledge Bitcoin
Russian Deputy Finance Minister Alexey Moiseev said that Russia plans to recognize Bitcoin as a legitimate financial instrument in 2018, in order to fight money laundering, as per Bloomberg’s release. The central bank is coordinating with the government over consolidating their position over crytpocurrencies. The need for monitoring Bitcoin and other cryptocurrencies arises from the fact that the traditional monitoring methods won’t suffice for Bitcoin monitoring. The need also stems to the fact that money moved abroad through illegal methods like fake trades and loans has been cut down by nearly half last year and amounted to $771 million.
How Bitcoin is faring in Russia
While it is still unclear whether Bitcoin would be treated as cash or security or commodity, the digital asset’s trading volume has increased over the last couple of weeks. The trading volumes on Local bitcoins alone exceeded 342 Million rubles which is worth roughly $6 Million and is high for a country that has made the cryptocurrency illegal.
Bitcoin transactions have been experiencing an uptick thanks to widespread adoption across the globe. What started off as a pet peer to peer payments project has now become an alternative to the existing financial system. Tried, tested and facilitated by individuals who believe that the disruptive nature of the currency will find major applications, Bitcoin has indeed come a long way. What makes the cryptocurrency so lethal is its ability to provide near zero cost transactions and without the interference of a third party for confirming. Added to this, the network also ensures a degree of anonymity and consensual security that makes it more preferable. Eight years have passed from the inception of the cryptocurrency and something interesting is happening in the start of 2017. Let’s delve deeper into the details:
The transactional boom:
Gradually Bitcoin experienced a steady increase in adoption in 2016. With most of the countries advocating digitalization of transactions to promote a cashless society, things have looked good for Bitcoin. With the kind of attention Bitcoin has garnered, the positives of the currency have been highlighted and has caught the public attention. It was just a matter of time before the currency went from just a speculative asset to an alternative investment means. Finding mainstream adoption, the currency has experienced a boom in its transaction owing to heavy merchant adoption.
Increasing Vendor acceptance:
As referenced already, the merchant and vendor adoption has been increasing steadily. Coinmap shows that currently there are around 9000 recognized vendors accepting Bitcoin worldwide as compared to 4000 in 2015. The online merchant acceptance has also increased drastically with Japan itself having around 20,000 online merchants that accept Bitcoin in payments. The abolition of 8% sales tax and favorable legislation encouraged the transfer of this asset seamlessly. Same has been the case with rest of the Asian countries where the legislation has helped the innovation.
The all-time high transaction fee:
The Bitcoin transaction fees are at an all-time high, up by 1289% since March 2015. The Bitcoin transactional volume has gone up by 173% over 2015, equaling 3 transactions per second. The increase in the volumes can be reflected through local bitcoins. Localbitcoins has shown that countries where the inflation is high[Nigeria and Venezuela] are significantly adopting to Bitcoin transactions. With steady increase in value and application, Bitcoin would surely become the prime means of exchange in good time.
The Bitcoin prices are trading in a sideways market, enjoying a long term confidence that the currency lacked previously. The adoption is on the rise and the currency is looking in its best shape of the past two years. Let’s see globally what has been happening on Bitcoin front that might have impact on prices:
Eu and Interpol launch Digital Currency working group:
Europol, the European Union’s top law enforcement agency, has co-founded a new working group dedicated to digital currencies. The initiative is being co-led by Interpol, the intergovernmental organization focused on law enforcement issues. The working group will involve the organization of collaborative workshops and a global network comprised of subject matter experts.
Europol said in a statement:
“Internet technologies become continuously more advanced, and so do the ways in which criminals utilize them for their illicit and illegal activities. Among these technologies, digital currencies are already transforming the criminal underworld.”
The group formed through a tripartite partnership between Europol , INTERPOL, and Basel Institute on Governance . The institute is a prominent intergovernmental organization that facilitates international police cooperation. The major focus of the group would be to tackle money laundering through virtual currencies.
Unocoin and LocalBitcoins: Two different stories:
Indian bitcoin exchange Unocoin recently announced its over-the-counter (OTC) marketplace. The company, founded in 2013, has over 90 thousand customers and a growth rate of 10-20% per month. It has launched two feature services, including OTC bulk trading and a new mobile application for iOS users. OTC markets are for traders who want to buy large amounts, without showing their transactions on public order books. Unocoin says it is continuing its mission to bring cryptocurrency feature services to the citizens of India.
While things look positive on Indian front, another Asian country bears a contrasting scenario. Russian authorities have banned LocalBitcoins after conflicting deliberation. The Russian Federal Service for Supervision of IT and Mass Communications, ‘Roskomnadzor’ has been instrumental in the ban. There has been a great debate in Russia over the status of Bitcoin with Government swaying towards negative policies. After announcing that they are planning to make Bitcoin trading legal last month, Russia banned LocalBitcoins on11th of September. The move came as a surprise to most, prompted LocalBitcoins to release a blog post explaining how to continue using the service through a VPN or the Tor browser.