Is Russia the New Crypto Hub?

There are three main clusters globally who have more or less decided the way they see blockchain technology and their related cryptos. In short there is a friendly approach (Malta, Gibraltar, Singapore, Korea, Japan, Switzerland), and more neutral – or better said undecided – approach (predominantly EU) and a more hostile approach (China, India, US).

Funny enough, there is one big absentee in that list: Russia. And, that is peculiar for a few reasons. First of all, there are a lot of blockchain and crypto related start-ups in Russia, more or less from day one. Secondly, and of course related to this, there is a lot of know-how, expertise and skills in Russia and Russians. Just randomly select a few ICOs and you see my point. With a population of say 145 million people, predominantly urban a sizeable pool of users. Additionally, Russia is rich in natural resources, and that could be a great opportunity in tying them together, for instance pegging a token to oil, gold or diamonds.

Initially the Russian President Putin said that in his view cryptocurrencies could pose a serious risk, which is a not uncommon response from a head of State. We also know that he met with Vitalik Buterin a few times. Obviously, we do not know what exactly was discussed, but let us assume at least that Vitalik was able to provide some context. After that Russia more or less kept quiet, until mid-February.

This time the Russian Duma (lower house parliament) revealed a plan to launch its own oil-backed crypto currency. Although we have seen that before with president Maduro launching the Petro in Venuzuela, the playing field in Russia is significantly different than in Venezuela. In order to facilitate this request from the Duma, president Putin has just announced he has set a 1 July deadline for new crypto regulations to be passed. The order asks for a regulatory framework for digital financial assets, more financial resources based on digital assets and the regulation of civil law digital settlements.

There are also rumors flying around that the Russian are considering launching their own national cryptocurrency, speculatively called the Cryptoruble. Now with new and stimulating regulation on the horizon, rumors will no doubt intensify.

That makes it significantly different than calling it a potential risk. Now the focus of these new regulations will be aimed at the development of the digital economy. Can we put Russia in the friendly cluster in 2019? not sure yet, but it is now very likely that Russia will relax its position on crypto and embrace new opportunities.