The Implications of Russia’s Endorsement of Cryptocurrencies
As cryptocurrencies have gained massive traction and attention during 2017, regulators and governments around the world have begun taking notice and considering how, if at all, they should respond to the phenomenon. The stance taken by different nations differs quite drastically, with some fully supporting the new technology, others advocating careful regulation without stifling innovation, and some trying to fight it all together.
Where Countries Stand Regarding Cryptocurrency Regulations
In the support camp we have countries like Switzerland, who are fully embracing the technology and looking to create an ICO friendly environment. The Swiss canton of Zug has already been dubbed ‘Crypto Valley’ due to so many blockchain startups, with the Economics Minister Johann Schneider-Ammann stating at the Crypto Finance Conference that Switzerland wants to become a ‘crypto nation’. Similarly, a group of crypto elites are aiming to build a ‘crypto utopia’ in Puerto Rico.
Somewhere in the middle we have countries like the USA, South Korea and Japan. All of which have massive trading volumes in cryptocurrencies, but also have fears of looming regulations. Earlier in the year there were rumors that trading could be banned in South Korea, but in a complete u-turn the government now plans to support the ‘development and normalization’ of cryptocurrencies whilst still protecting consumers.
Japan has been light on regulations up until the $500m NEM hack, which led to a series of exchange investigations and calls for stricter consumer protection. The US has a slightly stricter view, with plans to introduce regulations but also ensuring a measured approach is taken in order to prevent the stifling of innovation.
And then we have China. Despite the fact that during 2017 adoption of cryptocurrencies in China increased faster than any other nation and that they made up around 50% of the worlds Bitcoin mining population, the government have been relentlessly cracking down. Firstly, they completely banned ICOs, they then proceeded to freeze any bank account associated with exchanges and block all internet access to anything cryptocurrency related.
If you can’t fight them…
The great thing about distributed ledgers is that there is no central point of control, which makes it virtually impossible to shut down cryptocurrencies without shutting down the internet itself. They aren’t going anywhere anytime soon, so if you can’t fight them, join them.
If, like us, you believe that decentralization and blockchain technology will completely revolutionize almost every aspect of our lives, it is obvious that countries which create an environment to foster innovation rather than hinder it will be the ones that reap the rewards. Just as the USA became a hub for tech startups with the likes of Silicon Valley, those that encourage cryptocurrency development now will house the next generation of tech giants.
What’s the Big Deal with Russia Endorsing Cryptocurrencies?
When it comes to cryptocurrencies, Russia can’t seem to make their mind up on where they stand. Cryptocurrency settlements were made illegal in late 2017, but in January 2018 a draft law on ‘Digital Financial Assets’ was released by the Finance Ministry to ‘define tokens, establish ICO procedures and determine the legal regime for cryptocurrencies and mining.’
Furthermore, in a recent meeting with the president of Sberbank, Russia’s largest bank, Putin acknowledged that those who are late in the race will be dependent on the early adopters. He then went on to say ‘Russia cannot allow this’, citing how Russia had the intellectual base to progress these technologies and will look to develop them in the future.
In terms of trade volumes, Russia are currently a very small player, accounting for only around 0.13% of total BTC volume. However, these recent developments indicate a growing support for cryptocurrencies. It’s clear that Putin recognizes the potential of the technology and has a desire to become a global leader, which is huge news for the industry as a whole.
In a cold war-esque fashion, it forces big players like the USA and Europe into adopting a lighter tone when it comes to regulations, or they risk losing out to a nation that many would consider hostile. Make no mistake, it’s not as if all ICOs are about to relocate to Russia, but in the long run the nations that create an environment to encourage growth will be the ones to benefit the most from the blockchain revolution.
The larger implications of this are that any government planning regulations now has to consider the wider impact they might have, as it will ultimately impact that countries competitiveness in the global tech market.