#cryptorussia

"The country's government-supported Astana International Finance Center (AIFC) said Tuesday it had signed a deal of cooperation with Maltese firm Exante. In a press release, Exante, which calls itself a "next generation investment company," said it would work with the AIFC to develop the ex-Soviet nation's untapped cryptocurrency market. "Blockchain and cryptocurrencies are entering the mainstream of today's economic reality," Kairat Kelimbetov, governor of the Astana International Finance Center, said in the press release Tuesday. "Astana's leading financial regulators have already commenced their work and are laying the foundation for Kazakhstan's fintech-ecosystem. We believe that the AIFC can become an international hub for blockchain operations and the development of the digital assets market is our key priority in the near future." Kazakhstan's entry into the digital currency ecosystem would be underpinned by Exante's new blockchain platform, 'Stasis'. Blockchains are digital ledgers that record cryptocurrency transactions on encrypted "blocks" across a distributed network of computers. "The development of such a system will bridge the gap between the traditional asset market and the crypto-world," Anatoly Knyazev, co-founder of Exante, said. "We see keen interest from the market players, and we already have applications from other government-related financial institutions." The technology is being experimented in a "closed mode" at present, and Exante didn't indicate a timeline for commercial launch."  -- https://www.cnbc.com/2017/10/17/kazakhstan-plans-to-launch-its-own-cryptocurrency.html

The CryptoRuble: Russia's Next Currency interview by Sputnik's Andrew Korybko with Dr. Garrick Hileman, Research Fellow at the Judge Business School at the University of Cambridge and entrepreneur Jim Talbott October 21, 2017

As in Russia, Kazakhstan's cryptocurrency issuance will be controlled by the State, and is intimately tied to the country's status as a global energy exporter. The question of how rapidly we will see cryptorubles or cryptotengits (KZT) 'in the wild' being traded through the Moscow or available to non-Russian and non-Kazakh nationals is an interesting one. According to a story posted by V the Guerrilla Economist here at RogueMoney on October 19, ethereum co-founder Vitalik Buterin is skeptical governments in the former Soviet Union are actually ready to unleash these blockchain units into the global digital currency marketplace, where they could be owned by foreigners and compete with privately issued fiat like bitcoin or dash:

"Ethereum founder Vitalik Buterin has stated that he is “not expecting to see any kind of large-scale, live central bank digital currency actually launched for another few years.” He added that “if it is, then I guarantee you that it will basically be a server with a bunch of marketing buzzwords to make it look like a blockchain.” He made the remark while participating in an October 17 panel discussion at Swell, a conference convened by blockchain firm Ripple in Toronto."  -- https://www.roguemoney.net/?author=524c6a2de4b0ad97e93c9607

However, as the Russia Analyst argued in our October 16 piece drawing on the research of London Paul into potential gold or other physical commodity backing for these Eurasian cryptocurrencies, there is a geoeconomic logic to accelerating the use of the digital ruble and tengits as block chain logged petrocurrencies. Furthermore, even if the initial use of these cryptocurrencies is non dollar or non euro trade settlement for oil and gas contracts, it will not be long before they become attractive for transparent payment in the sector most plagued by corruption in the former Soviet space: real estate. Additionally Kazakhstan's role as a major global oil producer that like Russia stands outside of OPEC but is required to do business with the weakened cartel's production cuts makes the crypto-tenge an attractive asset to Gulf state investors -- particularly those keen to join in President Nazarbayev's 'Nurly Zhol' infrastructure investment program that's been expanded since Russia sanctions and lower oil prices hit Astana's economy in 2014.

This article originally appeared at The Sirius Report on October 12, 2017. -- JWS

Initially, Russian financial authorities regarded money issued by non-state approved institutions as illegal and could be used to launder money.  However, given that the Russian Finance Minister Anton Siluanov stated last month that the authorities had to accept that virtual currencies existed and that there was no sense in banning them but a need to regulate them, it was believed that Russia’s stance towards cryptocurrencies had changed. In addition the Finance Ministry was also working on a law including registration of those willing to buy virtual currencies.

However, the aforementioned comments by Shvetsov appeared to suggest that Russia was now backing away from the cryptocurrency arena. Afterall Shvetsov also acknowledged that the Russian central bank saw rising interest in cryptocurrencies because of the high returns to date but that they had transformed into high-yielding assets from being a method of payment. He also stated that his department believed that for both Russian citizens and businesses alike, the usage of such cryptocurrencies as an investment carried unreasonably high risks.

See Also  Russian Ministry of Health and VEB Bank Launch Blockchain Project

However when we analyse the comments made by Putin in Sochi, the reality of Russia’s position on cryptocurrencies becomes very different.

Putin acknowledged that cryptocurrencies were becoming more popular and turning into a full-fledged payment instrument and an investment asset in certain countries. However he also stated that they carry serious risks in that they can be potentially used for laundering criminal proceeds, evading taxes, for financing terrorism as well as potential fraudulent schemes whereby citizens may become victims. There is no doubt that these assertions, in some context at least, are perfectly reasonable but it was the next statements which clearly laid out Russia’s future position on cryptocurrencies.

The fact that Putin stated that the circulation of cryptocurrencies should proceed in Russia taking advantage of new technology solutions in the banking sphere whilst avoiding the creation of unnecessary barriers to inhibit further growth and the improvement of the national financial system, spoke volumes.

Putin also asserted that there was a need to develop a regulatory system on the basis of international agreements that would protect the interests of the people, businesses and the government. In addition there should be the provision of legal guarantees for work within the scope of innovative financial instruments.

Whilst many will disagree with Putin’s assertions about the need for an international regulatory system to be implemented for cryptocurrencies and Russia’s intention to outlaw exchanges, this does not mean that Russia is averse to cryptocurrencies. The reality is that this could not be further from the truth as Russia is already developing its own asset-backed cryptocurrency and remains committed to its future adoption on the international stage.

See Also  Russia Begins to Play Its Hand in Cryptocurrency Mining