Russia is on its way towards wider adoption of the cryptocurrencies like Bitcoin, – but the process will have its national characteristics. Since 2015, statements and moves by the Russian economic and financial establishment point in that direction. That includes head of Sberbank Herman Gref, Prime Minister Dmitry Medvedev, and now most recently Vladimir Putin himself was reported as having caught the “blockchain bug“, according to Shuvalov the first Vice Premier, Putin has come to realize the potential of the digital economy and importance of having a technological edge in it.
It’s easy to understand why the government in Russia is so interested (and somewhat fearful) of the cryptocurrencies: they offer a convenient loop to evade the Western sanctions, potentially helping to relieve the reliance on the USD and US electronic payment systems – the threat of having the SWIFT cut off following the incursion in the Ukraine in 2014 was real enough to start contemplating options. Russia has recruited some help from China’s UnionPay in building its own national card system, MIR, that starting this year will be mandatory for use in government payrolls, taking away the market share from VISA and MasterCard.
Given the Russian government’s tendency to try and control if not micromanage, the most obvious vector would be towards a single, state-sanctioned, nation-wide cryptocurrency – such ideas (Bitruble or something) were aired earlier in 2015 but didn’t materialize… This time the Central Bank has actually started working on the strategy, as was announced during the St. Petersburg economic forum these days, and some early drafts will be made available in the fall session of the Russian legislative assembly. The Ministry of Communications and Mass Media announced earlier in May that the bulk of the regulatory paperwork will be ready around 2019.
The government has in the past exercised a much more light-handed approach (uncharacteristically for the Russian authorities) towards the various fiat currency-based electronic payments system, effectively letting WebMoney, Yandex Money, Qiwi etc systems flourish – largely because the banking system was too slow for e-commerce, and the money was largely to remain within Russia. There is a good chance, although by no means a guarantee that the authorities will exercise a similar approach towards cryptos. An over-regulated blockchain will likely be ineffective, since its key characteristic is the decentralized, peer-to-peer nature of the system.
Despite the efforts of the long-standing Russian crypto community, increasing interest from the establishment, the general awareness and adoption remains very low. Most Russians haven’t even heard of Bitcoin and cryptocurrencies – if the government were to introduce the large portions of the populace to the nationwide crypto at this point, it would have to be done so under the guise of yet another electronic payment system – a case in point, one of the leading payment operators, Qiwi has just got into the blockchain field buying a Russian startup (link below).
The low rate of adoption is illustrated in the low number of the news stories generated so far in 2017 (literally no more than a dozen perhaps). Some of the headlines from May-June:
June 1, Sberbank and Severstal (steelmaker) Will Be Using a Blockchain-based Digital Contract.
May 16, QIWI, a Russian electronic payments giant, acquires a blockchain startup.
May 3, A Restaurant in Moscow Now Accepts Bitcoin.
This underscores the problem for an early blockchain investor starting to look at Russia – currently there are very few if any cases of industry application, although there’s undoubtedly potential in the 130-million strong country’s vast and still somewhat underdeveloped e-commerce, logistics, and retail services (and perhaps energy and utilities). The potential for cross-border transfers is the one that’s lying on the surface.
As the field develops, and the network effect starts kicking in, I am sure the rate of the news generation will pick up as well. We’re going to hear some interesting stories coming out of Russia.
A brief search shows a half-dozen Russia-related cryptos, however it seems that very little is known about them and their creators, with the exception of Sibcoin and Golos which are getting some exposure.
Sibcoin (SIB) http://sibcoin.org/ Currently most widespread in the country.
Golos (GOLOS) https://golos.io/about An internal token of a blockchain media portal
RussiaCoin (RC) http://www.russiacoin.info/
RubleBit (RUBIT) http://rublebit.com/
Moneta (MONETA) http://moneta.io/