By Landon Manning
Following a scathing report from the Central Bank of the Russian Federation that the nation should ban all Bitcoin (BTC) mining, trading and investment activity, several prominent figures within the government have spoken out in favor of the cryptocurrency — most notably including Russian leader Vladimir Putin.
The story began on January 20, 2022, when the Russian central bank published a long-awaited report on the state of cryptocurrency as it relates to the nation, titled “Cryptocurrencies: trends, risks, measures.” The text of the report pulled no punches on its view of the entire ecosystem created by Bitcoin, claiming that its volatile and speculative nature make it a dangerous risk to any Russians who get in any way involved. Calling for an unequivocal blanket ban of bitcoin and other crypto assets, the report advocated not only for financial institutions to cauterize any trade or investment in cryptocurrency, but also for the entire Russian cryptocurrency mining industry to be shuttered. Currently, Russia is among the top producers of Bitcoin mining hash rate in the world.
This hardline attitude continues a trend from this particular institution, which also proposed the ban of all cryptocurrency investments in December 2021. Further, the Russian government as a whole has acted against the very concept of digital currency in the past, passing a law in July 2020 claiming that all cryptocurrency tokens are a type of investment, a taxable piece of property, but are not to be used in place of fiat currency for any actual transactions. Bloomberg even went so far as to make the claim that the Russian central bank is largely conveying the wishes of the Federal Security Service (FSB), Russia’s main intelligence network and successor to the infamous KGB.
However, in a January 25 statement made by Ivan Chebuskov, the Ministry of Finance’s director of financial policy, Chebuskov claimed that the ministry is strongly opposed to a cryptocurrency ban and has in fact already prepared plans to create softer regulation for the industry. He claimed that it would be a mistake to cut Russia out of this high-tech and global industry, while other nations worldwide are advancing new technologies by embracing it.
“We need to give these technologies the opportunity to develop,” Chebuskov said, according to a translated report on the statement. “In this regard, the Ministry of Finance is actively involved in the development of legislative initiatives in terms of regulating this market.”
In a video conference between Putin and the country’s council of ministers on January 26, the president shared the statement that, “I would like to start with an issue that is currently in the spotlight — the regulation of cryptocurrencies,” per a translated report.
Dwelling only briefly on the subject before moving to discuss the pandemic and other matters of state, Putin threw cold water on speculation that Russia was moving to ban cryptocurrencies. Although he stressed his belief that the central bank “does not stand in the way of our technical progress” and sees its own path to cutting-edge technology, and that the bank even has some valid concerns with risky economic investments made around bitcoin, he stated that Russia cannot ignore its “certain competitive advantages here, especially in …mining.”
Putin specifically alluded both to Russia’s electrical capacity and the number of well-trained personnel in the country. Asking only that the bank and the government have a discussion, reach “some kind of unanimous opinion” and prepare a report in the near future, Putin declined endorsing more specific courses of action at this time.
Putin’s comments show not only that another major world government is looking favorably on Bitcoin, but also that Bitcoin is beginning to convince world leaders with a simple argument: it’s got too much potential to ignore or treat unfavorably.
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