Despite the perceived hostility towards Bitcoin in Russia, the country’s central bank has just announced that it has officially established a new “work group” to study the digital currency’s underlying blockchain technology and its potential application in financial markets.
Bank of Russia Forms Blockchain ‘Work Group’
In a press release issued by the Bank of Russia on February 28, the country’s central bank appears to have confirmed its favorable attitude towards Bitcoin, or at least its underlying blockchain technology.
The announcement reads (translated from Russian):
The central bank has created a Work Group to analyze prospective technologies and innovations on the financial market. The agenda includes studying distributed technologies (e.g. blockchain), as well as new developments in mobile payments, and other fields.
The work group aims to hold regular meetings with bank heads, self-regulated organizations and other financial market participants. The group will discuss various aspects of applying new financial technologies such as digital currency and the blockchain to modernize Russia’s financial markets.
“The development of a modern financial market is inseparable from the development of financial technologies,” noted the head of the newly formed work group and Deputy Chairperson of Russia’s Central Bank, Olga Skorobogatova. “Financial services are quickly becoming digitized with the new business models, market ecosystems and changing behavior of consumers of financial services. A hi-tech financial market needs a hi-tech regulator that must thoroughly understand the idea behind these new financial technologies and their practical applications.”
One bank that’s all but certain to be part of this group is Sberbank, Russia’s largest bank. In December of 2015, the bank announced its interest in developing “blockchain-powered financial services” as well as joining the R3 consortium of global banks studying the technology alongside Goldman Sachs, JP Morgan, Credit Suisse, and many others.
A Looming Battle
But while it appears that the government is warming towards Bitcoin, Russia’s Ministry of Finance, in particular, has been outwardly hostile towards digital currency, referring to it as a “money surrogate” and facilitator of money laundering and terrorism financing. The Ministry has also drafted a recent bill that aims to introduce harsh penalties and imprisonment for issuing, using and even “disseminating” information on cryptocurrencies.
This division could lead to a potentially pivotal battle in the State Duma as proponents of innovation are set to go head to head with those favoring a clampdown. However, the Ministry of Finance’s bark may be louder than its bite since Bitcoin’s decentralized nature ensures its resilience to being shut down, i.e. Bitcoin has no central authority to target.
[Editor’s note: It is currently not illegal to use Bitcoin in Russia]
Moreover, considering the recent growth in Bitcoin trading volume in the country (see chart below) against the backdrop of a free-falling Ruble, interest from major Russian banks, and the newly created blockchain work group, the tide may be turning in favor of those wanting to bring Russia’s financial markets into the modern era.
Is Russia softening its stance on Bitcoin? Let us know your thoughts in the comments section below!
Images courtesy of kinibiz.com, cbr.ru, coin.dance