Russia could evolve into the next major Bitcoin market, as the government continues to encourage Bitcoin mining and moves closer towards regulating its cryptocurrency exchange market.
Earlier this week, Cointelegraph revealed that Russian President Vladimir Putin approved the launch of CryptoRuble, a cryptographically-secured state-issued national digital currency.
Minister of Communications Nikolay Nikiforov said:
“I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after two months our neighbors in the EurAsEC will.”
Several analysts have speculated that the launch of CryptoRuble would likely lead to a nationwide ban on Bitcoin and other cryptocurrencies. However, according to Putin, that is not the case and the Russian central bank has plans to regulate Bitcoin and cryptocurrencies.
In a statement released by the Kremlin, Putin explained that similar to other countries such as the US, Japan, and South Korea, Russia needs regulatory frameworks to oversee cryptocurrency trading and activities. However, he has no interest in banning digital currencies. Putin stated:
“As is known, many countries are looking for ways of regulating the circulation of cryptocurrencies and are beginning to create the necessary legislative framework, a legislative regulatory system. We need – based on international experience – to build a regulatory environment that will make it possible to codify relations in this sphere, reliably protect the interests of citizens, businesses and the state and provide legal guarantees for using innovative financial instruments.”
This is a big change from a week ago, when Putin condemned Bitcoin for its potential criminal uses.
Russia is eyeing the regulation of Bitcoin and cryptocurrencies instead of an outright ban in order to retain some measure of control. If Russia bans cryptocurrencies, most trading activities will move to over-the-counter (OTC) markets and peer-to-peer (P2P) trading platforms, which are extremely hard to censor and regulate. With trading platforms equipped with Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, the Russian government can prevent the usage of cryptocurrencies such as Bitcoin and Ethereum in illegal activities.
The Chinese government also recently issued a statement which implied that it is planning to introduce a national licensing program for cryptocurrency exchanges, as it fears cryptocurrencies being associated with criminal activities.
In September, Alexander Drozdenko, the governor of the Russian Leningrad region, encouraged Bitcoin miners and mining facility operators to establish digital currency mining centers in the region to promote and encourage others to participate in the global Bitcoin mining industry.
Local news publications including 47News reported:
“Production sites that are being released during the construction of new power units of the Leningrad nuclear power plant will be available for new residents as early as 2018.”
Drozdenko also told local reporters in a press conference covered by Bitcoin.com:
“As you know, the construction of LNPP-2 is being completed in Sosnovy Bor, and large areas of the first nuclear power plant are being liberated, adding that this site may be of interest to cryptocurrency miners.”
If Bitcoin mining and cryptocurrency exchange markets in Russia demonstrate an exponential rate of growth supported by regulatory frameworks released by the Russian government, Russia could evolve into the next major Bitcoin market in the long term.