By Nathan Ferguson
If you want to know about the country that welcomed cryptocurrency and blockchain technology with open arms, you must learn about Russia. Russia was among the first few countries to regulate the use of cryptocurrency and include blockchain technology in everyday life. The country played an important role in building the future of the crypto industry in its initial days by building a robust pro-crypto community.
The overall approach has played an essential role in building the global digital asset economy. Today, Russia is an important country and the backbone of the cryptocurrency marketplace. It is the world’s third-largest crypto miner.
Russia has a significant history and promising future when it comes to the use of cryptocurrency. The country started its voyage in the cryptocurrency market in early 2016. Today, five years down the lane in 2022, after seeing many ups and downs in the world’s leading virtual financial market, Russia has introduced its cryptocurrency in the market. It came along redefining laws involving cryptocurrencies and imposing restrictions in using them as a monetary currency.
This article will discuss all the necessary details about cryptocurrency and how it works in Russia.
The Position Of The Cryptocurrency Market In Russia
Russia is the largest country in the world and one of the most robust economies globally. Russians are pro-technology people, they welcome developing technologies and include them in their daily life. They were some of the few nations to invest in the cryptocurrency market when cryptocurrency’s value started to observe a new rise. Russia accompanies China, the USA, South Korea, and Vietnam to accept cryptocurrency. They made the most of the ICO era and made the best decision to include cryptocurrency in their daily lives.
As Russia stepped into the blockchain and cryptocurrency quite early than other countries, the opportunities for its people were endless. From mining to investing in the world’s most popular cryptocurrencies like Bitcoin was common and backed by the state. The bloom also attracted opportunities development and use of softwares built on blockchain technology.
The rising interest in the blooming industry attracted big investors and invited the development of crypto ventures. The ventures brought employment opportunities and profit to individuals and the economy. As people saw the growth prospect, many ventures revolving around cryptocurrency and blockchain technology emerged in the country.
The Cryptocurrency Mining Industry
As the cryptocurrency voyage started early, there were a lot of opportunities to grow in the market. Mining cryptocurrencies was a profitable affair that attracted everyone, the crypto beginners and investors. Many companies established their cryptocurrency mining businesses in Russia. Big companies investing in crypto mining machinery and the Russian government provided electricity at lower rates.
Many start-ups were able to negotiate on terms with the government to get access to electricity at lower rates to run mining machinery. With the permission to use the state-funded electricity, the cryptocurrency mining ventures had a better window to earn profits from their mining businesses. There are many public limited companies trading in Russia that have types of machinery for crypto mining.
The famous companies include Nordgold, Evraz, Polymetal International, Mechel, Nornickel, Polyus Gold International, and many others. Bitriver is the largest cryptocurrency mining company in Russia is supported by excess and affordable electric power generated by the Bratskaya hydropower plant on the famous Angara river. Many similar companies have access to cheap electricity for cryptocurrency mining.
Cryptocurrency Trading
Basically, cryptocurrency is a digital asset, used as a trading instrument. Russians are great investors in the cryptocurrency market. 46% of retail investors in Russia are involved in cryptocurrency trading. The Russian cryptocurrency market observed transactions of around 5 billion dollars per annum. It includes trading via exchanges and peer-to-peer transactions. Many cryptocurrency exchanges are successfully running in the country and allow cryptocurrency traders to take part in the world’s fastest-growing financial market.
There are a number of cryptocurrency exchanges in Russia. They regulate purchasing and trading of cryptocurrency across the country while informing traders of the legislature. Most of these exchanges accept payment in Rubble-the fiat currency of the Russian Federation and provide customer support services in English and Russian language.
These services simplify the investment process for all people residing in Russia. These exchanges provide a platform that traders can use to explore the cryptocurrency world and serve traders with the best functionalities. The leading exchanges in Russia include Binance, Bybit, Kraken, OkCoin, Bittrex. The Russian cryptocurrency market also welcomes foreign cryptocurrency exchanges and proved to provide promising opportunities.
Advancements In Cryptocurrency Market From Russia
As Russians entered the cryptocurrency financial market, besides investments, they also worked to make advancements using blockchain technology. Vitalik Buterin and Igor Barinov are two famous figures in the cryptocurrency market from Russia. Vitalik Buterin is co-founder of the world’s second-most robust and most advanced cryptocurrency, Ethereum, while Igor Barinov is a leading developer on blockchain technology.
The country uses blockchain technology to ensure the safety of its information and maintain its confidentiality. The technology also boosts software speed and helps with the verification steps in transactions and supply chain processes.
Blockchain technology has included speed, transparency, and cost compliance in the processes. The enhanced functionality and higher quality of softwares led developers to use this technology and increase the number of blockchain-based apps in daily usage.
Use Of Cryptocurrency In Daily Life
The country is the central hub to promote the use of cryptocurrencies in its day-to-day activities. With many high-scale software built using blockchain technology, Russians are involved in mining and trading cryptocurrencies more than any other country of the world and use cryptocurrency in their daily life.
Russia is one of the countries that issue cryptocurrency credit and debit cards. ATMs to use these electronic cards are scattered throughout the country. As per statistics, there are more than 50 cryptocurrency ATMs in Russia.
Russians are very pro-cryptocurrency. Many businesses in the country accept payments in cryptocurrency. If you are only thinking about big companies that include cryptocurrency, you are wrong about it. The list of companies accepting payments in cryptocurrency is long, and many companies are adding to this list every day.
Not only are big businesses a part of this list, but this list also includes some grocery stores, small restaurants, and fitness gyms. Businesses are more interested in building their digital currency assets and offering their services or products to people in their exchange.
There is a general perception that people in Russia are more interested in including cryptocurrency in one form or another. The research was conducted to evaluate the percentage of people inclined towards using cryptocurrency in the country, and the results presented in percentile.
As per the statistical analysis, 12% of Russian citizens use cryptocurrency trading as a means of primary income, and more than 90% of people want to get their pay in cryptocurrency. Most of the people in Russia also want to use cryptocurrency for payment while purchasing products or services.
Legal Status Of Cryptocurrency In Russia
As so many cryptocurrency-related activities are going on in Russia, we can assume the legal status of cryptocurrency in the country. Cryptocurrency is completely legal in Russia. The government permitted the public to use the digital asset and established a friendly environment for everyone who wanted to take part in the cryptocurrency industry. It included compensations for people who wanted to start mining ventures, invest in digital assets, use cryptocurrency in running their businesses or use it in daily transactions.
For a good period the cryptocurrency industry flourished in Russia until the government made a shift in its policies and legal framework for dealing with digital assets. Firstly, it was feared that Russia was imposing a ban on the use of cryptocurrencies. The authorities were passing a signal to impose a complete ban until the country issues comprehensive legislation on using digital assets and introduces its cryptocurrency in the financial market.
Later, the government took a u-turn from their former statement and, instead of imposing a complete ban, tackled the situation by putting some restrictions on cryptocurrency transactions. However, the government imposed a complete ban on mining cryptocurrencies. The ban put a severe setback on the cryptocurrency mining industry in Russia that flourished in the past five years bringing profits for everyone associated with the companies.
Although the country is not imposing a complete ban on cryptocurrency transactions, it has taken a different approach relieving cryptocurrency investors in the company. Since March 2021, the government has had a limiting approach on the legal papers, and the cryptocurrency is now classified as a property in Russia. The action is properly documented and accepted via a bill in the assembly.
The bill has imposed restrictions on cryptocurrency users at various levels. Russia’s republic officers can no longer own cryptocurrencies, and the general public cannot make transactions with them. It restricted people from paying for goods or services using cryptocurrencies. Startups have to obtain a license from The Bank Of Russia to introduce blockchain-based securities.
As digital assets are now treated as property, the government also imposed a tax on owning and using cryptocurrency in daily transactions under the property law. As there are no proper guidelines for cryptocurrency-related issues in the country, there are many grey areas while dealing with cryptocurrency and people are uncertain about the trading conditions in the country.
For the time being, an earlier version of the digital asset bill is implemented to regulate the status of digital assets in the country. Under this bill, the local cryptocurrency exchanges are restricted to function and serve cryptocurrency traders anywhere in Russia. The offshore trading platforms are not restricted under this order, and they can continue to offer their services without any hurdle.
As most people were associated with local cryptocurrency exchanges for trading, they had their digital assets stored in their wallets. With the restriction, these traders can no longer access their trading accounts and perform trading activities. It has led them to hold their digital assets for a longer period until the laws are formed and restrictions are lifted, allowing local exchanges to operate normally.
For the time being, the traders’ digital assets are at risk. The government is not taking any measures to eliminate or reduce the risks associated with using foreign trading platforms. The public holds grudges against the Bank Of Russia for putting restrictions on cryptocurrency trading. It was always against the unrestricted use of cryptocurrency and its use as a payment method in the country.
As there was a state of panic in the country, the government sped up the law forming process to ease the public. The specific structure for imposing and regulating taxes on cryptocurrency has been recently introduced in the country for the betterment of cryptocurrency dealers and investors. The law has clarified many ambiguities, if not all, and cryptocurrency dealers are now relieved as they get proper instructions about implemented taxes and new regulations imposed on all cryptocurrency dealers in the country.
The lower house of Russia’s federal assembly, also known as State Duma, has proposed an exclusive crypto tax framework. As per the news published by this lower house of Russia’s federal assembly, the framework for implementing taxes on cryptocurrency will be accepted and become a part of the law by the end of 2021.
The country is more directed towards introducing its cryptocurrency, and the president of Russia, Vladimir Putin, met with the founder of the world’s technically advanced blockchain platforms, Vitalik Buterin, to work on Russia’s digital asset. The meeting took place at the annual Russian business event, the St Petersburg International Economic Forum.
Along with introducing the cryptocurrency, both important figures also discussed other important topics, including establishing links with the Russian partners who can support them in the financial market. The Russian Financial Minister is also positive about introducing its cryptocurrency and using it like regular financial securities. A similar approach was used by other countries such as the United States. Eighty-seven other countries have also launched their cryptocurrency to compete in the developing technical world.
The Russian Cryptocurrency
CryptoRubble is Russia’s cryptocurrency. Russia started working on this digital asset back in 2017, but it could not formally launch it until today. Russia is vigorously introducing its cryptocurrency and started final testing it in June 2021. The Bank Of Russia is motivated to present it for general use in 2022 and many other banks is Russia Due to many reasons, the Russian cryptocurrency CryptoRubble is still not launched formally and is still under the trial period.
Have you ever thought it is taking too long to introduce the CryptoRubble? Most probably, Russians are trying to introduce a cost-effective cryptocurrency within the financial system, so it gives more competition among the banks accepting this cryptocurrency.
If you talk about the drawback, CrytoRubble is a centralized digital asset, just like the Russian Rubble but in encrypted form. Despite making huge profits in the cryptocurrency mining industry, Russia imposed a ban on mining to add value to its cryptocurrency as CryptoRubble can not be mined. It will be only issued by an official body of the Russian government.
It is more focused on adding security and keeping an eye on transactions, moving away from the major benefits that cryptocurrency has to offer for people. Though we feel that CryptoRuble is not offering benefits, in reality, it is offering many benefits and serving the goal for which it is designed and introduced by the Russian government. Eliminating money laundering and the use of the asset for criminal purposes is the main purpose of centralizing cryptocurrencies.
The Future Of Cryptocurrency In Russia
Currently, the future of prevailing cryptocurrencies in Russia is ambiguous. The Central Bank of Russia has imposed a blanket ban on digital assets. They have restricted their people from mining and trading cryptocurrencies. Local cryptocurrency exchanges are also restricted to function in Russia, and no one can invest funds in the cryptocurrency market.
In short, every trading activity is prohibited for the time being, and the country is working on implementing a law governing cryptocurrencies. Once the law is in action, Russians will be allowed to deal in CryptoRuble or other related cryptocurrencies only.
It is expected that CryptoRuble will gain popularity and value in the world’s financial market with time. When metaverse is in full swing in the upcoming years, owning a cryptocurrency will benefit Russia and Russians in many forms. Though the bans on cryptocurrency may seem restricting, they will have a positive impact on the economic and financial sectors in the long run.
Conclusion
Cryptocurrency is a digital currency. The trend of mining and trading cryptocurrency has immensely increased. The cryptocurrency was introduced as a decentralized mode of payment on blockchain technology, but now, seeing its great popularity and use in daily activities, governments are regulating it lawfully.
Russia has played a pivotal role in supporting the cryptocurrency industry by setting up mining companies, trading exchanges, establishing bitcoin ATMs, and allowing its people to use cryptocurrency in their daily life without imposing strict laws and taxes. Currently, the country has shifted its policies and imposed a ban on cryptocurrency-related activities. The country is introducing its own digital currency CryptoRuble to regulate transactions and keep moving with the fast transforming digital world.