2014 Cryptocurrency debut
In Russia, the cryptocurrency was discovered only in 2014, when the success of Bitcoin was talked about all over the world. In narrow technical circles, the cryptocurrency was known before, but in 2014 it attracted the attention of the press and law enforcement agencies.
Everything new and unknown in Russia meets a ban. So in early 2014, the Central Bank of the Russian Federation released a release saying that the use of Bitcoin is very dangerous and comparable to the financing of terrorism. One month later, the Prosecutor Generals Office of the Russian Federation said that the law enforcement agencies, together with the Central Bank, took up the fight against cryptocurrency-related offences. The Drug Enforcement Agency said that with the help of cryptocurrencies, buyers of banned substances are calculated with sellers and called for finding a way to combat technology.
Proposals to ban cryptocurrencies have snowballed. First, the Ministry of Finance proposed to fine Russians for the use of cryptocurrencies for 50 thousand rubles, then it was proposed to introduce criminal sanctions for the issuance of cryptocurrency.
Surprisingly, in December 2014, the Ministry of Economic Development criticized the bill to ban cryptocurrencies as untenable: primarily because the definition of money surrogates included company loyalty programs, which clearly disrupted the work of the entire private business.
Over time, an alternative view began to emerge. By the summer of 2015, the Central Bank had become more loyal to cryptocurrency and without advertising, began to consider options for carrying out some operations with Bitcoin. The head of the Sberbank opposed the prohibition of cryptocurrency in Russia.
The rumor that MMM Pyramid founder Sergei Mavrodi may manipulate the cryptocurrency exchange rate has a strong influence on Bitcoins rate. In the summer of 2015, he began a new project in China.
In the same year, the Bank of Russia provided an official comment on the regulation of cryptocurrencies. The Central Bank warned citizens of the Russian Federation against the use of cryptocurrencies and noted that, according to Russian legislation, the release of «money surrogates» is prohibited.
2016 Blockchain implementation in Russia
In March 2016, the Central Bank created a working group to study cryptocurrencies and their possible use. Herman Gref admits to having invested a small amount in Bitcoin. In the same year, the Ministry of Finance stopped drafting a law banning cryptocurrency. The agency considered that the threat of digital assets proliferation is small, and fears about the harmful effects of cryptocurrency are misplaced. Moreover, Rosfinmonitoring, which advocated the prohibition of digital assets, offered to create its own cryptocurrency. The country has changed the vector of perception of blockchain and cryptocurrency won its first victory in Russia.
2017 Peak of Popularity
In 2017, Herman Gref said that problems with cryptocurrency implementation would be solved in a year and a half, and he was right, as the use of cryptocurrencies would soon begin to boom. In 2017, everyone talked about cryptocurrencies. And the word «bitcoin» even took the second place in the top search words of 2017 in Russia. The authorities realized that ignoring or forbidding the subject was foolish. In the same year, cryptocurrency exchanges began to appear in the country and Russians began to invest actively in digital assets.
The representative of the Bank of Russia suggested that electronic currency should be given national status. Head of the State Duma Finance Committee Anatoly Aksakov spoke for the free development of cryptocurrency in Russia. Russian President Herman Klimenko, Advisor on Internet Development, announced the creation of the Russian Association of Blockchains and Cryptocurrencies. And in October 2017, the president instructed the government and the Central Bank to prepare amendments to the legislation on the regulation of cryptocurrencies by July 1, 2018.
The historic Bitcoin price peak was reached in December 2017. In 2018, the price fell by more than 80%. For a while miners continued to build capacity, but in August growth stopped, and since November hashrate started to decline and decreased by almost 50%. The difficulty of mining grew until October, but then began to fall, and the last level change was the second-sharpest drop in its history. The overall decrease in complexity from the highs was 25%. At this time, there was a decline in interest in cryptocurrencies in Russia.
2019 Adoption of the TFA in Russia
In 2019, Russia approved the national program «Digital Economy». The government decided on the plans for the implementation of the program, appointed responsible for this, and also involved private and public companies, which were directly involved in the development of technology. After that it became clear that «digital economy» will require more than 20 new laws. Then began a tight work in 6 main areas:
- Information infrastructure;
- Information security;
- Digital technologies;
- Cadres for the digital economy;
- Digital Public Administration.
- The program is scheduled to run until 2024.
2020 COVID, fall and stunning growth
In 2020, Russia was also affected by the «black Thursday» on March 12, when markets responded with panic to the COVID-19 outbreak, causing the cryptocurrency collapse. Bitcoin and Ether are down 50% in a day. The collapse led to the elimination of positions, as peak network congestion prevented many investors from adjusting their secured debt positions, and Maker was severely affected by DAI losing its anchor.
Bitcoin started the year at around $7,195, while Ether was only $129.
In early 2020, markets went up, giving hope that the bear market was coming to an end. By mid-February, the ether price had doubled, and Bitcoin had overcome the critical resistance barrier of $10,000.For those who closely followed the market, crypto seemed to be showing signs of life again. After the March decline, markets returned to their values by the fall. In December, many cryptocurrencies doubled.
2021 Law on TFA
On January 1, 2021, the law «On digital financial assets» finally came into force in Russia. He gave a definition of cryptocurrency, but banned its use in Russia to pay for goods and services. Also banned were advertising payments with digital money.
According to the law «About TSFA», cryptocurrency in Russia can be bought, issued, sold, to make other transactions with it, but Russian citizens can not pay it.
The law refers to individual documents that will regulate mining, the organization of the release and circulation of digital currency in Russia, as well as its taxation.
The TFA Act also allowed companies to issue their own tokens. On December 22, it became known that the Palladium Foundation, established by «Nornikel», issued the first tokens.
2022 Ban cannot be used
At the beginning of the year, a struggle for the future regulation of cryptocurrencies took place at the highest levels of Russia. The Central Bank and the Treasury Department became parties to the dispute, with a few days difference, and presented two different concepts to regulate cryptocurrencies.
The Central Bank first presented its ideas. His concept stated that cryptocurrencies carry significant risks for the economy and threaten to undermine the currency circulation and sovereignty of the ruble, through cryptocurrency Russians will withdraw funds abroad uncontrolled, and even more often it is stolen. The Central Bank proposed to limit the cryptocurrency concept to the maximum in Russia there is no only a ban on its storage.
Many experts criticized the position of the Central Bank, as Russia is the third-largest in the world in computing power for mining, and the ban could destroy the entire industry. And a few days later, the Ministry of Finance presented its concept of regulation of the crypto market. The Ministry of Finance document states that a total ban would destabilize the situation. The agency therefore proposed a soft version of regulation. Work is continuing on legislation to regulate cryptocurrencies and mining.
The Future of Cryptocurrency in Russia
In eight years, the financial authorities failed to reach a consensus on cryptocurrencies. Despite this, many Russians are actively buying Bitcoin for investment purposes. Others are building mining farms and extracting cryptocurrency. Some provide training in digital assets. Recently, domestic cryptocurrency exchange and spot trading platforms that are protected from global sanctions have begun to emerge.
The fate of cryptocurrencies in Russia is unclear. Digital assets are likely to be used to circumvent Western sanctions, and cryptocurrencies will become the usual means of payment and accumulation for most Russians.