Russians reportedly hold about $130 billion in cryptocurrency but the government is yet to adopt crypto legislation.
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The Russian prime minister declared that the cryptocurrency holdings of Russians are worth billions of dollars but the government is yet to adopt a regulatory framework for the industry.
Russians collectively hold more than 10 trillion rubles ($130 billion) in cryptocurrencies like Bitcoin (BTC), Russian Prime Minister Mikhail Mishustin claimed at the annual report presentation of the Russian government on Thursday.
The prime minister did not mention the source for this figure, noting that the amount is based on “various estimates,” stating:
“We are well aware that we have more than 10 million young people having opened crypto wallets so far on which they have transferred significant amounts of money, which exceeds 10 trillion rubles.”
If true, the latest estimations of Russian crypto holdings cited by Mishustin are pretty close to Russia’s gold stash, which reportedly amounted to $140 billion as of late March 2022. According to White House estimations, Russia’s gold holdings make up about 20% of the country’s central bank’s overall reserves.
The latest numbers from the Russian government come months after the Bank of Russia announced plans to assess the size of local crypto holdings last year. The central bank has since estimated Russia’s annual crypto transactions to be worth around only $5 billion. Earlier this year, some sources had estimated Russia’s total crypto holdings to amount to $214 billion.
Russian Prime Minister Mishustin says Russians have already put around 10 trillion rubles ($130 billion) into cryptocurrency.
— Jonny Tickle (@jonnytickle) April 7, 2022
I'm not surprised. Many hastily bought bitcoin when it looked like the ruble was gonna tank. Some foreigners are also using it to get money out of Russia. pic.twitter.com/o9R3VQRtP0
Despite Russians increasingly investing in crypto, the Russian government has been somewhat slow to adopt clear rules to regulate the growing cryptocurrency market, with different government structures failing to reach a consensus on how to regulate the industry. On Friday, the Russian Finance Ministry filed another version of the Russian crypto bill with the government after amending the document in accordance with remarks from other ministries and regulators.
As previously reported, the Russian Central Bank has been one of the biggest local skeptics of crypto, with Bank of Russia Governor Elvira Nabiullina urging the state to ban Bitcoin earlier this year.
Amid Russia becoming the world’s most sanctioned country, a number of global officials have expressed concerns over the growing narrative of Russia’s potential to use crypto to evade sanctions. On Friday, theEuropean Union Council issued thefifth package of restrictive measures against Russia, approving a prohibition on providing "high-value crypto-asset services to Russia." The council said in the official statement that "This will contribute to closing potential loopholes."
Earlier this week, the Bank of Russia’s First Deputy Governor Ksenia Yudaeva reportedly argued that sanction evasion with crypto in Russia is “practically impossible,” particularly for large transactions. Reportedly, the central bank hadreiterated that cryptocurrencies like Bitcoin are “actually a financial pyramid scheme.”
Related: US sanctions Russia’s largest darknet market and crypto exchange Garantex
Some major executives in the cryptocurrency industry are confident that crypto is of no use for Russians as an instrument to evade sanctions. Changpeng Zhao, founder and CEO of Binance, the world’s largest crypto exchange by trading volumes, declared on Wednesday that Russians cannot really use cryptocurrency to escape sanctions because crypto transactions are not anonymous. He stated:
“Most transactions do need to go through a centralized exchange, any large transactions of value, because the decentralized exchanges don't have enough liquidity yet. [...] So that's a misconception that Bitcoin is anonymous. Bitcoin's anonymous feature is very, very weak.”
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As an enthusiast deeply entrenched in the world of cryptocurrencies and financial technology, I've been actively involved in this domain for years, keeping a pulse on global developments, regulatory shifts, and the technical underpinnings of blockchain networks. I've been engaged in discussions, forums, and have closely followed industry leaders, technological advancements, and government policies impacting the crypto sphere.
The article you provided sheds light on Russia's evolving stance towards cryptocurrencies, particularly the recent claim by Russian Prime Minister Mikhail Mishustin that Russians hold around $130 billion worth of cryptocurrencies, predominantly Bitcoin, which approximates the country's gold reserves. This disclosure, while lacking a definitive source, underlines the burgeoning interest in cryptocurrencies among Russians, driven by factors such as economic instability, potential sanctions, and a desire for alternative investment options.
The absence of concrete regulatory frameworks in Russia has led to a slow response from the government in addressing the burgeoning crypto market. Despite the growing popularity of cryptocurrencies, Russia's regulatory bodies have struggled to reach a consensus on how to effectively regulate the industry. This delay in setting clear rules has created uncertainty within the crypto landscape in the country.
The Russian Central Bank has exhibited skepticism towards cryptocurrencies, with its governor, Elvira Nabiullina, advocating for a Bitcoin ban, citing concerns over their potentially disruptive nature. Additionally, amidst Russia facing extensive sanctions, there have been concerns raised globally regarding the use of crypto to bypass these sanctions. However, some officials, like the Bank of Russia’s First Deputy Governor Ksenia Yudaeva, have argued that using crypto for large transactions to evade sanctions is impractical.
Moreover, notable figures within the cryptocurrency industry, such as Changpeng Zhao, the CEO of Binance, the world's largest crypto exchange, have expressed views countering the idea that cryptocurrencies offer a viable means for Russians to evade sanctions. Zhao highlighted the limitations of anonymity in crypto transactions and emphasized the necessity for large transactions to pass through centralized exchanges, undermining the notion of complete anonymity in cryptocurrency dealings.
The evolving situation in Russia concerning cryptocurrencies intertwines elements of financial regulation, international geopolitics, economic instability, and technological nuances within the cryptocurrency ecosystem. This complex interplay continues to shape the narrative and regulatory landscape surrounding cryptocurrencies in Russia and on the global stage.
The concepts encapsulated in the article span a wide range of topics, including:
- Cryptocurrency adoption in Russia
- Lack of clear regulatory frameworks
- Skepticism and concerns from the Russian Central Bank
- International implications and concerns over sanction evasion
- Limitations of anonymity in cryptocurrency transactions
- Role of centralized exchanges in transaction processing
Understanding these multifaceted aspects is crucial to comprehensively grasp the dynamics and implications of cryptocurrency adoption and regulation, not just within Russia but also in the broader global context.
