Vladimir Putin

Russian crypto advocates urge Putin to stop regulatory hostility

Russia’s existing regulatory stance on the cryptocurrency industry would potentially lead the country to “direct financial losses,” the RACIB argued.

As Russia continues to delay adopting cryptocurrency regulations, local advocates have appealed to Russian President Vladimir Putin to change the government’s approach to regulating the market.

The Russian Association of Crypto Industry and Blockchain (RACIB) — a major group of crypto and blockchain enthusiasts in Russia — issued an open letter to Putin on March 6, urging the president to address the risks of ignoring the global development of the crypto industry.

In the letter, the RACIB argued that Russia has been too slow to implement experimental legal regimes targeting crypto adoption despite enforcing its first crypto law, “On Digital Financial Assets,” in 2021.

In November 2022, lawmakers in Russia introduced a series of legal amendments to the crypto law, proposing to launch a “national cryptocurrency exchange.” According to the RACIB, some of those amendments would significantly complicate the implementation of digital financial technologies in Russia as they introduce criminal sanctions for local blockchain developers.

The proposed amendments would give Russian enforcement authorities a “sea of choice” to pressure the local crypto community, the RACIB’s executive director Alexander Brazhnikov told Cointelegraph.

“It will not be easy for companies in the digital asset industry to prove that they are doing everything within the framework of the Russian legislation,” Brazhnikov stated.

The RACIB has ultimately called for Putin to put an end to Russia’s hostile regulatory stance on crypto, as it prevents local businesses from fully using the potential of crypto and would potentially lead the country to “direct financial losses.” The RACIB stated:

“The existing state policy around the regulation of digital financial assets creates serious risks for the Russian economy to lag behind not only unfriendly, but also friendly countries due to delaying the introduction of new financial technologies.”

According to the RACIB, one of the biggest risks behind ignoring the benefits of the crypto industry is the relocation of local talent to advanced jurisdictions, including Eurasian Economic Union (EAEU) countries like Kazakhstan and Armenia.

To help Russia change its tough regulation stance on crypto, the RACIB has asked Putin to build a working group, including representatives of the digital asset community, to collaborate with the government on building the state’s crypto regulation policy. The group has specifically expressed interest in developing and applying cross-border payment systems in Russia, EAEU jurisdictions, as well as other countries like Brazil, India, China and South Africa.

In 2021, RACIB’s Yury Pripachkin argued that Russia was doing “absolutely nothing” to regulate the local cryptocurrency market.

The news comes soon after the Russian central bank reiterated its uncompromised stance on crypto, with Elizaveta Danilova, head of Bank of Russia’s financial stability department, arguing that legalization of crypto investments threatens the welfare of Russian citizens. At the same time, the Bank of Russia sees no problem in legalizing crypto mining and allowing crypto use in cross-border transactions.

Putin calls for blockchain-based international payment system

The Russian President criticized Western sanctions and urged for a system “independent of external interference.”

Russian President Vladimir Putin criticized the monopoly in global financial payment systems and called for an independent and blockchain-based settlement network on Nov 24, speaking at the International AI Journey Conference in Moscow.

During the event organized by Sberbank, the largest Russian bank and a major lender to the government, he stated:

“The technology of digital currencies and blockchains can be used to create a new system of international settlements that will be much more convenient, absolutely safe for its users and, most importantly, will not depend on banks or interference by third countries. I am confident that something like this will certainly be created and will develop because nobody likes the dictate of monopolists, which is harming all parties, including the monopolists themselves.”

Putin also noted that global payments and nations are at risk due to tense relations between Russia and the West following Ukraine’s invasion, labeling sanctions imposed by countries as “illegitimate restrictions.”

“The existing system of international payments is expensive, the system of its correspondent accounts and regulation are controlled by a narrow club of states and financial groups,” noted the Russian president.

A day before, the local media reported that lawmakers have been in discussions for amendments to the existing cryptocurrency legislation, laying down a legal framework for a national exchange.

Another recent development, a bill was introduced into the Russian State Duma, the lower house of parliament, on Nov. 17 legalizing cryptocurrency mining and the sale of the cryptocurrency mined.

As reported by Cointelegraph, chairman of the Duma Financial Markets Committee Anatoly Aksakov believes the “passage of the law will bring this activity into the legal field, and make it possible to form a law enforcement practice on issues related to the issuance and circulation of digital currencies.” Currently, cryptocurrency cannot be used for settlements in Russia.

Pro-centralization Russian president grants citizenship to Edward Snowden: Report

The views of the NSA whistleblower, who has been in Russia since 2013, seemingly clash with those of President Vladimir Putin, who has often worked against promoting decentralization.

Russian President Vladimir Putin reportedly granted citizenship to United States National Security Agency whistleblower Edward Snowden, who had been residing in the country since 2013.

According to a Monday report from Reuters, Putin signed a decree effectively changing Snowden’s legal status in Russia from permanent resident to citizen. The NSA whistleblower has been in exile from the United States following his leak of thousands of classified documents to journalists but continued to speak on issues including national security in addition to cryptocurrencies and blockchain technology.

While Putin has taken legislative action in Russia that seems to curtail the use of crypto — including banning the use of digital assets as payments in a July law — Snowden has frequently spoken on the benefits of cryptocurrencies like Bitcoin (BTC). The whistleblower and now Russian citizen revealed in 2019 that he used BTC to pay for the servers from which he released the infamous documents of the NSA leak, and said in April he played a pivotal role in creating the privacy token Zcash (ZEC).

“Snowden is not a traitor,” said Putin in a 2017 interview with film director Oliver Stone. “He did not betray the interests of his country, nor did he transfer any information to any other country that would damage his own people […] He shouldn’t have [leaked NSA secrets]. My view is that what he did was wrong.”

Snowden would potentially face charges related to espionage from the Department of Justice if he were to return to the United States. It’s unclear at the time of publication what led President Putin to grant Snowden citizenship, but the U.S. and Russia have faced volatile diplomatic relations following Russia’s invasion of Ukraine and thesubsequent economic sanctions imposed by the U.S. and other nations. In contrast to Putin — whom many have criticized as having taken a more autocratic role in leading Russia — Snowden has often spoken on the dangers of government overreach and the need for oversight.

“I don’t care if you’re in the United States, I don’t care if you’re in Germany, and I don’t care if you’re in Russia, I don’t care if you’re in China — it is a global trend where we see government doing more,” said Snowden in DeData Salon fireside chat from Sept. 23. “They have greater capability because of technology acting as a magnifier of pre-existing power. It allows them to increase their leverage, right? They’re leveraging their influence to try to sort of act and compete not just within their own borders but globally and now we have those levers starting to press on each other and it’s causing sort of problems and conflicts all over the world.”

Did you know that whistleblowers are sentenced to more time in prison than corrupt officials who trade secrets for sex⁠—more time than even actual spies?

The government has made *telling* the truth a greater crime than *selling* it.#PardonRealityWinner pic.twitter.com/dMdFxOlf4g

— Edward Snowden (@Snowden) July 26, 2022

Snowden’s reported Russian citizenship status would not necessarily preclude the whistleblower from ever returning to the United States. A sitting U.S. president has the constitutional authority to grant reprieves and pardons for “offenses” against the country, which would likely include federal espionage charges. However, despite calls from many civil liberties advocacy groups, the two previous presidential administrations have not pardoned Snowden, nor has President Joe Biden suggested thahe will during his term.

Russia plans to roll out digital ruble across all banks in 2024

Bank of Russia started CBDC testing in 2022 and expects to implement an official banking rollout in the year of presidential elections in 2024.

The Bank of Russia continues working towards the upcoming adoption of the central bank digital currency (CBDC), planning an official digital ruble rollout in a few years.

According to the Bank of Russia’s latest monetary policy update, the authority will begin to connect all banks and credit institutions to the digital ruble platform in 2024. That would be an important year for Russia as the country is expected to hold presidential elections in March 2024 and incumbent President Vladimir Putin has the constitutional right to get re-elected.

By that time, the central bank expects to complete “real money” customer-to-customer transaction trials as well as the testing of customer-to-business and business-to-customer settlements.

In 2023, the Bank of Russia also intend to conduct beta testing of digital ruble-based smart contracts for trades by a limited circle of participants.

The bank pointed out that it expects to proceed with the CBDC rollout in a gradual manner, unlocking new different trials and features year by year. As soon as the Federal Treasury is ready, the digital ruble will also feature consumer-to-government, business-to-government, government-to-consumer and government-to-business payments, the Bank of Russia said.

The central bank also expects to introduce the offline mode for the digital ruble by 2025 alongside integration of non-bank financial intermediaries, financial platforms and exchange infrastructure.

“The phased process of introducing the digital ruble will provide market participants with the opportunity to adapt to new conditions,” the Bank of Russia noted.

The Bank of Russia will also cooperate with other central banks developing their own digital currencies to carry out cross-border and foreign exchange operations with digital currencies, the authority added.

As previously reported by Cointelegraph, Russia debuted its first digital ruble trials in February 2022, following its official CBDC roadmap released last year. The Bank of Russia previously formed a group of twelve banks to test the digital ruble, including major banking giants like Sber, VTB, Tinkoff Bank and others.

While keeping up with the CBDC rollout plans, Russia has been somewhat lagging behind its targets to regulate the crypto industry. President Putin urged the adoption of crypto regulation multiple times before Russia adopted its crypto law “On Digital Financial Assets,” which didn’t change much as it still lacks many regulatory aspects like crypto mining, taxation and others.

Vladimir Putin signs bill banning digital assets as payments into law

Russia’s Parliament is also considering two other bills related to digital assets: regulating miners’ activities, and requirements for firms handling crypto transactions.

Russian President Vladimir Putin has signed a bill into law prohibiting digital financial assets as payments more than a month after it was introduced to the country’s lower chamber of Parliament.

In a Thursday update, the Russian State Duma noted that Putin signed a bill suspending certain parts of an existing federal law “on banks and banking activities,” effectively making it illegal for people to use cryptocurrencies to pay for goods and services. The initial draft of the bill from June 7 specified the “prohibition against the introduction of other monetary units or monetary surrogates on the territory of the Russian Federation.”

The Duma chair approved the draft bill on June 8, and following revisions and other considerations, the upper chamber of Parliament, the Federation Council, approved the legislation on July 8. Under the Constitution of the Russian Federation, all bills need to be approved by both chambers before being signed into law by the president.

Cointelegraph reported in June that the bill introduced the concept of an “electronic platform” — a financial platform, investment platform or information system in which digital financial assets are issued. Under the recently passed law, these platforms will likely be required to submit transactions and actions to the Russian central bank’s registry as part of the national payments system.

Russia’s Parliament is currently considering two other bills related to digital assets. One will potentially regulate crypto miners’ activities in the country, requiring them to follow a certain procedure to register as sole proprietors or self-employed. Another, named “on digital currency,” proposed requirements for firms handling digital asset transactions, including licensing and disclosure about risks and data privacy.