Last week, Russian news sources reported that the lower house of the country’s Federal Assembly may pass a resolution to allow the country to further develop cryptocurrency systems. According to Rambler, the Russian media outlet that first announced the news, officials are currently looking to implement formal cryptocurrency regulation this March. Oleg Nikolaev, a member of the State Duma’s Economic Policy Committee, is said to have claimed that the cryptocurrency bill aims to easily integrate businesses digital assets and is approaching the final steps in its formation.1
The news of a possible cryptocurrency bill for Russia comes after months of speculation regarding crypto’s future and prospective implementations. Back in September, it was announced that several large Russian banks expressed an interest in blockchain and cryptocurrency potential due to high demand for distributed ledger technology in the country.2 Interest, however, has also created controversy. Russian-based cryptocurrency scams have recently been exposed, but not kept the Russian market from trading heavily within two of Asia’s largest exchanges, China’s Binance and Singapore-based Huobi.3
With the continued interest and relative success of Russia’s blockchain industry, recent reports have also indicated that Russia is hoping to implement their new crypto regulations on a new digital currency supported by oil. Former head of the Ministry of Energy and owner of investment corporation Energia, Igor Yusufov allegedly proposed a bill to establish the currency as a way to work around trade and financial limitations, stating, “cryptocurrency on the energy market hypothetically allows us to avoid the costs associated with the use of currencies that are not backed up – the unpredictability of exchange rate fluctuations, the commission for currency exchange, trade restrictions.”4
Yusufov also explained the decision to test a blockchain system in the oil market as an easier way to navigate the amount of trade restrictions and suggested a similar use of cryptocurrencies by other oil-producing nations. “OPEC+ member countries control more than 2/3 of the world’s oil reserves,” the former minister stated before adding, “Such a union in their own interests will be not only logical but also economically justified.5 He went on to assert that the project would be established within the Commonwealth Independent States (“CIS”), including Armenia, Belarus, Georgia, Kyrgyzstan, Russia, Turkmenistan, Ukraine and Uzbekistan, among others.
A strictly oil-supported currency similar to Russia’s proposed legislation does already exist; Venezuela launched Petro in February of 2018 in part as a response to the country’s collapsing economy. Controversy and mystery have surrounded the currency, and while it was recently announced that access to the system was expanded, the success of Petro has been widely scrutinized.6 It was especially not received well by officials in the United States. Claiming that the currency was meant to undercut U.S. sanctions, President Trump signed an executive order prohibiting any U.S. financial participation in Petro the following month.7
While the fate of Russia’s cryptocurrency prospects remains to be seen and a legislative decision is not expected until March, the outcome could be significant. By minimizing interference from the United States, Russia would then be able to establish the basis of a system of trade for participating CIS energy manufacturers and consumers.
- Gola, Yashu. “Russia to Regulate Cryptocurrency with a Keen Eye on Oil-Backed Digital Currency.” CCN. February 24, 2019. Accessed February 26, 2019. https://www.ccn.com/russia-regulate-cryptop-with-a-keen-eye-on-oil-backed-digital-currency.
- Berman, Ana. “Major Russian Banks Highly Interested in ‘Working With Crypto,’ Local Sources Say.” Cointelegraph. September 20, 2018. Accessed February 26, 2019. https://cointelegraph.com/news/major-russian-banks-highly-interested-in-working-with-crypto-local-sources-say.
- Rapoza, Kenneth. “Will Russia Make Any Waves In Crypto This Year?” Forbes. January 02, 2019. Accessed February 26, 2019. https://www.forbes.com/sites/kenrapoza/2019/01/02/will-russia-make-any-waves-in-crypto-this-year/#385e5b854271.
- Johnson, Robert. “Is Russia Working On An Oil-Backed Cryptocurrency?” Crypto Daily. February 26, 2019. Accessed February 26, 2019. https://cryptodaily.co.uk/2019/02/russia-working-on-oil-backed-cryptocurrency.
- Johnson, Robert. “Is Russia Working On An Oil-Backed Cryptocurrency?”
- Redman, Jamie. “Maduro’s Petro Becomes More Accessible, but Scrutinized by Venezuelans.” Bitcoin News. February 26, 2019. Accessed February 26, 2019. https://news.bitcoin.com/maduros-petro-becomes-more-accessible-but-scrutinized-by-venezuelans/.
- Lee, Matthew. “Trump Bans US Use of Venezuelan Cryptocurrency.” U.S. News & World Report. March 19, 2018. Accessed February 26, 2019. https://www.usnews.com/news/business/articles/2018-03-19/trump-bans-us-use-of-venezuelan-cryptocurrency.