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Russia to Recognize Bitcoin in 2018

Posted on April 14, 2017 | by [email protected]

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.

Russian Federal Tax document confirms ‘Bitcoin is Legal’, the boost for this year’s high?

Posted on December 2, 2016 | by [email protected]

2016 has showcased one clear trend in Bitcoin trading prices, bullish move at the start of every month. No matter whether the underlying reasons are fundamental or purely technical, this move has been observed at the start of every month in the later part of the year. For over 6 months Bitcoin has traded consistently over $500. But this year’s high (till date) was marked at the start of December and the reasons around it are pretty interesting. The Indian currency demonetization has been a steady factor to take the market out of choppiness. But we believe the final push came from Russian adoption of Bitcoin that has circulated quickly among market players. Let’s look into the details of how Bitcoin has fared in Russia:

The Love Hate relationship:

Russian Rubble’s trading against Bitcoin has seen prolific volumes in the past giving hope to better adoption in the country. Russia has struggled since the fall of the Soviet Union to build confidence in the ruble. This is majorly to curb the once-common practice of Russians demanding payment in U.S. dollars and other foreign currencies. The cryptocurrency supporters were happy in 2014 when Russia announced about regulating Bitcoin. But later the Finance Ministry went on to ban Bitcoin much to the disappointment of the supporters. Though they have not imposed the legislation strictly, the local Bitcoin market was significantly affected.

National Cryptocurrency and Blockchain Network:

Although Russia has stayed away from Bitcoin, it is considering the possibility of introducing a national regulated cryptocurrency. Though it would be a cryptocurrency, Russians are planning to make it a bit centralized as against bitcoin. A Russian regulated cryptocurrency should not be a non-emission currency but it will have its issuer with rights and responsibilities. Also, an anti-trust agency within the Russian government is testing a blockchain-based document management system. Named as “Digital Ecosystem” the project involves creating a completely digitalized document ecosystem. The project aims at developing tools that can increase the speed, reliability and quality of interaction during document exchange.

Legalizing Bitcoin:

A document by the federal tax authority in Russia has revealed its first official stance on the legal status of cryptocurrencies which turned out to be positive. A summary of the document was shared by Artem Tolkachev, director at Deloitte for legal services for technology and head of the Russian Blockchain Community. It outlines that bitcoin doesn’t necessarily fall under any jurisdiction. It is so often deemed a ‘money-surrogate’ by Russian officials calling for its ban. But there are no specific laws for surrogate money and predictably, a cryptocurrency hence tendering its status to legality. While this is being considered as a loophole, no mention of any cryptocurrency ban in the latest official document can certainly been taken as a positive indication.

Is the world slowly turning towards a #bitcoin oriented economy?

Posted on November 21, 2016 | by [email protected]

When one sees that the applications of a technology are multifold, with time it would impact the legacy systems. When it comes to cryptocurrencies, the legacy system is the existing financial setup. That being said, the important question here is how are cryptocurrencies impacting it? Well, the existing financial system has many loopholes which might be dangerous if not properly monitored. Anyone who witnessed or experienced the brunt of the 2008 housing collapse would understand this really well. Too much control over the purchasing power of money and its manipulation can be hazardous. Even the Governments and the Central Banks have come to realize this off late. This has led to the experimentation of State owned cryptocurrencies that are decentralized and open. Let’s look into how countries are experimenting with them in their nascent stages:

Russia hates Bitcoin but wants to have its own cryptocurrency:

After China, Russia became the second country to ban Bitcoin. But as hypocritical it might sound, Russia is considering the possibility of introducing a national regulated cryptocurrency. The Russian Federal Financial Monitoring Service (Rosfinmonitoring) revealed this according to the Kommersant newspaper. The idea of introducing a cryptocurrency is being discussed with representatives of banks and at meetings in the Finance Ministry. Though it would be a cryptocurrency, Russians are planning to make it a bit centralized as against bitcoin. A Russian regulated cryptocurrency should not be a non-emission currency but it will have its issuer with rights and responsibilities. This issuer can be “financial organizations that will be entrusted with the emission of cryptocurrencies.” This activity is most likely to be subject to licensing, Rosfinmonitoring said.

South Korea’s progressive take:

South Korea can be credited as the most progressive nation when it comes to cryptocurrencies for the variety of applications they provide. From a wide range of vendors accepting Bitcoin to the launch of the first Bitcoin based ETF in the world, Korea has always been ahead.

Recently,the chairman of South Korea’s Financial Services Commission (FSC), Yim Jong-yong came out with an interesting announcement. He said that his department will “Lay the systemic groundwork for the spread of digital currency.” The FSC is the South Korean government office overseeing financial services. In 2008, the department assumed authority over all financial policies regarding the financial market. No details were given about the form or technology that the FSC’s digital currency will use. Basing on the local experimentation, it is believed that they would be using a new cryptocurrency based on Blockchain Technology.

World’s oldest Central Bank is in the race too:

Sweden’s central bank is reportedly considering the issuance of its own digital currency, ekrona. This is primarily to address the significant decline of the use of cash in the country. First revealed in a Financial Times report, Sweden’s Riksbank could introduce and issue its own digital currency before the turn of the decade. Sweden has seen a rapid decline of the use of physical cash – both coins and notes – in recent times. It is estimated that the Circulation has dropped by 40% since 2009, leaving Riksbank little choice. A large number of Swedes have abandoned cash for cards and other forms of digital payments turning it into a cash-free society.

Can Blockchain bring complete transparency to Governance?

Posted on November 14, 2016 | by [email protected]

When it comes to the multiple applications of the Ledger based technology, it will never cease to amaze how quickly the world is willing to adapt to it. Apart from the conventional technological applications blockchain might offer, transformation of unconventional databases is another major application. Owing to its speed of access, decentralization and complete transparency, blockchain is being preferred in storing Government documents. The main intention of such tectonic shift is to provide complete transparency to the people when it comes to Government. Let’s look into how Government has adopted Blockchain for governance across the world:

Russian Government’s surprise move:

Surprisingly for a country that has been an active non supporter of cryptocurrencies, this is a pleasant surprise. An anti-trust agency within the Russian government is testing a blockchain-based document management system. Named as “Digital Ecosystem” the project involves creating a completely digitalized document ecosystem. The project aims at developing tools that can increase the speed, reliability and quality of interaction during document exchange. This project is one of the most notable ones to emerge from the country given the debate about cryptocurrencies. This makes Russia one of the first countries in the world where the state and market participants are looking at these innovations as a way to simplify business operations.

Vermont pioneered to be the ‘Smart State’:

Vermont has taken some legislative steps in 2015 to enable the state using Bitcoin’s technology for state records. It also planned to launch smart contracts and other applications in a drive to become a leader in the field. The major plan was to create a blockchain based public records system to ensure complete transparency. The other benefits include identifying of erroneous records and wrong data capture. The order, signed by the governor, called for a report that elaborately discusses the risks and benefits of blockchain technology. Owing to cost of implementation of blockchain for public records management system, Vermont dropped the plan in 2016. However, Vermont is still driving to be technologically ahead and is looking into ‘Smart Contracts’ for governance.

Dubai jumps into action:

The Crown Prince of Dubai recently announced strategic plan that would see all government documents secured on blockchain by 2020. The prince revealed that the goal of this initiative is to open the platform to other cities around the world

He said:

“The emirate is building on that achievement by constantly working to foresee the future and keep up with the fourth industrial revolution and all the prospects of increased efficiency that come along with it.”

Further, officials believe that this strategy will be built on ‘three pillars’, including government efficiency, industry creation and international leadership. The expected result of this project is increased government efficiency by speeding up the transactions. Once the documents are on blockchain, the innovators believe that the project will create business opportunities for the private sector.