Russia’s government appears to be more willing to work with the cryptocurrency industry after sending a series of mixed signals.
Izvestia, a Russian news outlet, reported Sunday that state lawmakers are ending its plans for creating a state-run crypto exchange – instead, setting rules and regulations for already existing businesses running in the nation.
An English translation of the article was linked on Twitter by Colin Wu of Wu Blockchain via a translation link, describing that the country is shifting its focus to allow private companies to build crypto exchanges.
Russian lawmakers have said they will no longer move forward with plans to create a state-level cryptocurrency trading platform. Focus on developing rules that would allow private companies to set up such trading platforms, overseen by Russia's central bank, which is set to…
— Wu Blockchain (@WuBlockchain) May 29, 2023
The news article mentions that Ivan Chebeskov, Director of the Financial Policy Department of the Ministry of Finance for the Russian Federation, as saying that, “The [Ministry] did not support the establishment of one national crypto-exchange.” The idea for crypto regulation in the country, instead, is to “legally regulate the possibility of creating such sites by business.”
Anatoly Aksakov, head of the Russian lower house committee on financial markets, adds that instead of creating a singular, national crypto exchange, “it is planned to establish rules for the establishment and operation of such infrastructures.”
Aksakov says that certain crypto exchanges will also be allowed to facilitate cross-border payments, but has yet to specify names, as he acknowledged that new restrictions and guidelines may be implemented.
The news outlet that published the story reports that the Russian Central Bank “probably” will regulate the work of crypto platforms operating in Russia, with the regulator tasked with duties to manage international settlements to comply with Russia’s regulatory framework.
As the news broke, several private Russian crypto firms saw encouragement to continue operations.
“This will help minimise the risks of sanctions, cyber attacks on infrastructure, and eliminate possible market monopolies,” said Oleg Ogienko of BitRiver, a Russia-based cryptocurrency mining firm, to Izvestia.
Ivan Gostev, commercial director for GIS Mining, adds that Russia’s latest stance on crypto will “allow for more competitive and innovative companies to develop.”
It is no surprise that private Russian crypto operators are feeling motivated from the news – as the country ranks #137 out of 180 countries on the 2022 Global Corruptions Index, indicating the Russian market’s attitudes towards state-provided services.
Over the years, Russian regulators have been dancing around the subject of digital assets. In early 2022, the Bank of Russia proposed a full ban on crypto payments. Then, a month later, the Ministry of Finance submitted a proposal for Bitcoin regulations.
In July 2022, President Vladmir Putin signed to outlaw payments made in the form of digital assets – just to investigate stablecoins as a method to bypass sanctions.
Many Western-led financial sanctions are currently imposed against Russia after its invasion of Ukraine in early 2022, leading many citizens in the country to adopt digital assets. According to Triple A’s 2023 data for global crypto ownership, 5.87% of Russia owns cryptocurrency. The country ranks at 9th place in Chainalysis’ 2022 global crypto adoption index.
Russia’s crypto industry is hopeful despite the country’s history of mixed signals towards the sector, as a new chapter may unfold in the government’s relationship with cryptocurrencies.