The roundtable was called “Regulation of mining and circulation of cryptocurrencies in Russia: current status, opportunities and risks”. The party’s central executive committee gathered representatives from the Central Bank, the Ministry of Economic Development, the Russian Association of Cryptoindustry and Blockchain (RAKIB) and several industry experts.
The Bank of Russia explained the need to create some kind of authorized organization where trading would take place within the narrow framework of an experimental legal regime and only for the sake of foreign economic activity by international sanctions. Legalization of private cryptocurrencies in any form, “advertising and offers in any other form to an unlimited number of persons” must be prohibited, recalled the position of his agency, the director of the Department of Financial Technologies of the Central Bank, Stanislav Korop. Mining, yes, can be allowed, but under government control, and the mined cryptocurrency should be sold “provided that the objects of the Russian information infrastructure are not used”, i.e. somehow abroad.
In 2022, about $1 billion worth of cryptocurrencies were mined in Russia. The daily turnover of cryptocurrency exchange in Russia is almost the same amount, according to Sergey Mendeleev, CEO of Infefi and author of the Mendeleevshchina Telegram channel:
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“If we talk about the turnover of crypto in Russia in general, including futures on the Binance exchange, I am ready to prove that it will be at least $3-5 billion daily. Thus, the Central Bank proposes to legalize about 0.1% of the turnover on rather strict conditions, sending the remaining 99.9% from the gray to the black zone,” insists Menedleev. – Those who really don’t understand this, supporting at least somehow such endeavors and legislative initiatives, – well…. You’ll understand later.”
At the roundtable, Anton Nemkin, federal coordinator of the Digital Russia party project, suggested that all interested parties – representatives of companies and agencies, experts – share their positions in order to develop a coordinated position on the regulation of cryptocurrencies in Russia, taking into account the views of all parties.
Anton Nemkin, a member of the Duma Committee on Information Policy, is also a former FSB officer, who is listed in the British BBC and in the book “Crypta” by foreign agent Andrei Zakharov as the person who allegedly demanded that the administrator of the WEX exchange (formerly BTC-e), Alexei Bilyuchenko, transfer all of the exchange’s funds to a “Russian FSB fund”. The deputy is mentioned in a certain audio recording by a person with the voice of patriotic businessman Konstantin Malofeev – they say that on Lubyanka Bilyuchenko promised Anton to hand over the WEX user base to him. The MP himself is known to have ignored repeated questions from the BBC about his acquaintance with Alexei Bilyuchenko, while his PR assistant responded to a similar question by saying, “Anton Nemkin has nothing to do with Mr. Bilyuchenko or his professional activities.”
On May 17, law enforcement leaks site rucriminal published an article about the situation with the WEX case, saying that Alexey, who officially changed his last name from Bilyuchenko to Ivanov, voluntarily, but under pressure, agreed to a pre-trial agreement and the transfer of 10,000 bitcoins in favor of Malofeev. The material announced the transfer of the high-profile case from the district court of Novosibirsk to the controlled Meshchansky district court of Moscow. The rucriminal’s prediction came true: the Supreme Court approved the transfer decision on July 21, despite the categorical objections of the Prosecutor General’s Office.
It seems that there is no question of returning the funds to their legal owners, i.e. WEX users, at all. It remains to be seen who exactly among the participants in the scheme will receive the funds. But it certainly won’t be users of what was once the largest Russian-language cryptocurrency exchange.
Alexei Muratov, coordinator of the Digital Russia party project in the Donetsk People’s Republic, suggested finding a place for an experimental legal regime, a kind of legal reserve for digital currencies, just in Donbass.
Alexei Muratov is known as one of the former executives in the MMM pyramid scheme. Particular activity was seen in India, where Muratov was later even detained but later released on bail.
After MMM, Alexei Muratov founded the regional social movement Change the World Together (CWT) and participated in the development of the E-dinar pyramid scheme. And when it began to collapse, he began to develop the financial pyramid PRIZM. Both of these projects tried to disguise themselves as cryptocurrency projects. Both CWT and PRIZM were officially recognized as financial pyramids by the Bank of Russia in 2021. This decision was tried to be challenged, but to no avail: the court ruled to dismiss the challenge and in its decision confirmed the Central Bank’s conclusions.
PRIZM lasted about three years and effectively collapsed in 2020. The value of the PZM token collapsed 99.8% from its highs.
Now Alexei Muratov is the head of the central executive committee and deputy secretary of the Donetsk regional branch of the United Russia party.
Results of the round table
In the press release from the roundtable, the United Russia party was unable to find any objections to the Central Bank’s desire to effectively ban the free circulation of cryptocurrencies in Russia.
Yuri Pripachkin, head of the Russian Cryptocurrency and Blockchain Association, expressed fears that miners will not want to work under the conditions the government is creating:
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“You have to understand: our miners work in foreign pools to avoid persecution in the market due to sales of Russian-origin cryptocurrencies. Therefore, proposals to legalize themselves according to all the laws and requirements in Russia may be received by miners in the opposite direction”.
Alternative proposals to ban free circulation at the round table were either not voiced at all, or simply didn’t make it into the press release from the party’s press service.
Bits.media discussed the main risks of cryptocurrency bans for Russia nine years ago, shortly after the first documents from the Central Bank and the Prosecutor General’s Office appeared. Since then, in fact, lawmaking has hardly moved at all. The full list of risks is still relevant:
- Compliance with bans by the white market only (which will not exist). The black market traditionally does not comply with the bans.
- The outflow of qualified IT professionals and entrepreneurs abroad.
- Technical unpreparedness to enforce cryptocurrency laws and investigate crimes.
- Non-receipt by the Russian budget of taxes from businesses that have left or not emerged.
- Technical lag from the countries where crypto-technologies will be developed.
- Popularization of truly anonymous cryptocurrencies and methods of hiding activities that are now of little relevance.
- Giving an advantage to jurisdictions with more loyal regulation, creating strong competitors.
- Lagging in the economic and technical literacy of citizens.
How could it be otherwise? One of the regular authors of Bits.media in the article “Law vs law: what should be done with the regulation of cryptocurrencies in Russia” concluded: if you want to be a leader, you need to be the first, or be the best. At the moment it is no longer relevant for the Russian Federation. Based on the analysis of legal regimes in other countries for the development of the Russian cryptoindustry, the state is proposed to introduce preventive positive regulation, change the rhetoric of officials and create offshore zones to attract capital.
Blockchain Life founder Sergei Khitrov estimated the size of the cryptocurrency market in Russia to be around 20-40 trillion rubles (~$423 billion) as of 2021. Cryptocurrencies are one of the most promising areas of the financial market. Is there nothing to fight for? Is banning everything the best solution?
A 2020-2030s economy that doesn’t want to come in contact with the crypto world is a non-digital economy. And a non-digital economy in a digitized world is a backward economy. At the moment, unfortunately, there is not much reason for optimism regarding the regulation of cryptocurrencies in Russia. Especially seeing who and what initiatives are now being promoted.