Russia prioritizes the CBDC ruble as the overall cryptocurrency outlook seems optimistic

Introduced by the Chinese authorities Completely banned When equating cryptocurrency transactions with illegal financial activities in September, local cryptocurrency miners either gave up their attention or turned to Other countries in order to continue their business.

The U.S. subsequently became the leader in Bitcoin (Bitcoin) The amount of mining accounted for 35.4%The moderate Kazakhstan currently ranks second (18.1%), and the bronze medal is won by Russia (11.23%).

This is not surprising, because Russia has several advantages, which means that it is extremely profitable for almost all miners to start an encryption business in the country. There is cheap electricity, at least for the time being, there is friendly legislative regulation.According to analysts, in the spring of 2021, Russia’s electricity price will be 0.06 USD For every kWh of household use, $0.08 for commercial use.For comparison, in France, one kilowatt-hour of electricity Cost 0.2 USD US$0.14 for home and business, four times more expensive than Russia.Other estimates suggestion The difference in electricity rates when mining Bitcoin in Russia and Europe is actually close to 7.5 times.

Many private crypto farms and mining companies have emerged in the country. Of course, like the rest of the world, many Russian miners failed to survive the “crypto winter” of 2018, when the price of Bitcoin fell to nearly $3,500, making crypto mining unprofitable. But COVID-19 is forcing many people to look for additional income and find alternative ways to replenish capital.

Favorable mining conditions have even led to state-owned oil companies Suggest crypto mining in their field And use associated gas to generate electricity. By the way, Gazprom Neft, the largest natural gas supplier in European countries, launched a mining data center at its plant in Siberia as early as 2020.

Vitaliy Borshenko, co-founder of industrial mining operator BitCluster, is convinced that even with high power consumption, Russia’s mining industry will not only receive support from private companies, but also from the authorities:

“The Bitcoin mining industry is a unique purchaser of electricity. The uniqueness comes from the industry’s high flexibility in terms of location differences in payment methods and power load distribution. Huge facilities are built in remote areas of the country to provide tax revenue for the local budget. Provide employment opportunities for local residents. And since there is no shortage of electricity, the authorities can only support this process.”

Are cryptocurrencies legal in Russia?

Today, each state regulates the crypto industry in a completely different way according to its own interests. Some countries completely ban cryptocurrencies, while others have taken steps to legalize them.

There are already rules and regulations governing the circulation of cryptocurrencies in the Russian market. But as is the case in many other countries, there is a problem with regulating cryptocurrencies because the industry is very young and not all regulators are familiar with it.

Like many countries, Russia has closely followed global trends, and early signs of various bill proposals to regulate the industry appeared in 2014. The first clear regulatory step started in 2018. In 2019, the federal law “About digital rights“Effective, providing procedures and rules for the use of digital assets and tokens. A complete law”On digital financial assets“Began to talk. Finally, in January 2021, the still very “crude” and unfinished legislation came into effect. This is the first law designed to specifically regulate cryptocurrency and mining and introduce taxes, but it still has not recognized Cryptocurrency is a means of payment. Russian banks and stock exchanges can purchase, sell and exchange assets if they are included in the special register of the central bank.

However, the state has no mechanism Tracking profits from cryptocurrenciesWhen this law is applied to ordinary users, a person who wants to store bitcoins but does not tell anyone, they can do so safely due to the anonymity of the network. When cryptocurrencies are exchanged for rubles, U.S. dollars, or any other legal tender, deanonymization occurs, which makes it possible for the state to intervene in these transactions and create obstacles.

In general, Russian regulators cannot reach a consensus not only about the adoption of cryptocurrencies, but also how to label and subsequently supervise them.Recently, the Russian Ministry of Economic Development proposed to understand Mining as a business activity According to civil law. The proposal was supported by the Ministry of Finance, the Ministry of Energy and the State Duma of the House of Commons.

According to the Ministry of Energy, consumers must indicate the level of electricity consumption by enterprises or individuals. The State Duma also proposed to increase the electricity bills of miners because they do not pay any taxes. But the Central Bank of Russia does not support this initiative and refers to mining as a “currency substitute.” In September, the central bank recommended that banks Slow down payments by Russian users on cryptocurrency exchanges Fight against the “emotional buying” of cryptocurrencies.

For Valeriy Petrov, vice president of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain, this shows that although the local industry wants to cooperate with regulators, the central bank is still delaying decisive regulatory measures:

“Only two issues need to be regulated: the recognition of the legalization of its entrepreneurial activities and the crypto assets earned from sales outside the Russian Federation, in order to organize the inflow of foreign exchange funds into the country and determine the taxation procedures to the national treasury. For a long time, the crypto community All questions were raised.”

Digital ruble

What if the Central Bank of Russia really wants to get involved in the young and uncontrolled financial sector, but only wants to become a monopolist and create its own cryptocurrency?

As early as 2020, the central bank announced It is studying the possibility of the digital rubleThe new currency may be used online and offline, and will be stored in a special wallet. The regulator emphasized that its digital currency will be an equivalent form of national currency. The digital ruble will become a project of the new payment infrastructure, which will increase the availability and reduce the cost of payments and transfers for citizens and businesses. According to the Central Bank, the digital ruble should completely replace cash within 10 to 30 years.

This summer, the bank clarified that Prototype development The testing of the digital ruble platform is scheduled to be completed in December 2021. The currency test is scheduled to be conducted in January 2022, and the test will be conducted in several stages throughout the year. After this test, the regulator will develop a plan for its implementation.

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In addition to the usual payment methods, digital rubles can also be used for payment in the future tax, In Russia can only be paid in non-cash form.

Since the central bank has not disclosed all the details about the digital ruble, some financial organizations such as the Russian Banking Association have raised doubts and doubts. Critics cited the security of the transaction. It is not clear how the regulator will ensure the security of the data in the digital ruble system and protect it from unauthorized access and data leakage.

The Central Bank reported that settlements using digital rubles will be quite safe and stable. Especially through the system mixing based on the principle of centralization and decentralization, the data protection of the system must be ensured. The regulator outlined a multi-level protection plan against unauthorized transactions and appeals against disputed transactions. Perhaps, digital citizen files, biometric data and other tools will be used.

Security issues are not limited to issues related to the digital ruble itself. Some people see it as another tool for currency control over population and businesses. The role of commercial banks in the digital ruble system is also questionable. As the circulation of digital rubles grows, the number of their assets may decrease. As they will become intermediaries in the system, the role of their own products may be diminished.This may lead to a general decrease in the stability of banks, which may lead to harm economy.

Is Russia a threat to cryptocurrency?

It is too early to talk about the consequences of introducing the digital ruble. The central bank has not disclosed all the plans and implementation details of the new payment instrument. But if the system is successfully launched, then it may severely change the financial sector, weaken the role of banks and tighten the control of settlements.

Regulators hope that the launch of the digital ruble will be another power Used for the development of financial technology in the country, and will help ensure further economic stability.

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However, some Russian economists worry that the introduction of the digital ruble in the Russian market may become ban About cryptocurrency. The overall interest in cryptocurrency is caused by a series of advantages that the technology brings, including the possibility of making cross-border payments.

The Russian government may be concerned that the cryptocurrency ban may cause funds to flow out of the country and many miners and cryptocurrency activists to leave the black market. Borshenko believes that Russia will not ban cryptocurrencies when introducing digital rubles:

“The authorities are currently showing a positive attitude. Vladimir Putin stated in mid-October that cryptocurrency may exist as a means of payment.”