The Russian government is currently keeping all cryptocurrency owners in the country on their toes as it decided to crackdown on cryptocurrency websites.
Taas.com reports Russia’s Central Bank’s First Deputy Chairman Sergey Shvetsov, as saying that the bank welcomes imposing any restrictions on operations of external websites. Though the government has said that its decision to ban external websites dealing on cryptocurrencies is premised on the fact that cryptocoins pose a risk to its citizens and businesses, this reason is highly doubtful.
In the past months, the government and its financial regulatory agencies have been considering descending the sledge hammer on the heads of cryptocurrency traders and exchanges. The reasons advanced for their actions, though may hold some water, may not really be why such harsh actions are being taken.
Cryptocurrencies, especially bitcoin have been seen as serious threats to fiat currencies and the gains derived from printing them. Since blockchain was brought into the financial market scene, it has been considered a serious technology capable of upsetting the ways things are done in the system.
Bitcoin, for instance, has been widely accepted as the digital currency of choice for financial transactions online and for payment for goods and services. And since it is decentralized, Bitcoin, Ethereum and some other carefully selected cryptocoins have made things relatively easier, reducing the confirmation time for financial transactions, and putting you fully in charge of your own portfolio with no external interference from banks and other financial regulatory agencies. This indeed has become a source of worries for several governments across the globe.
First Deputy Chairman Sergey Shvetsov has openly declared that the Bank saw “all cryptocurrency derivatives to be a negative development on the Russian market and do not consider it possible to support it.”
The ban on external websites comes on the heels of the recent complaints by the Russian President Vladimir Putin, who had earlier demanded for the banning of cryptocurrencies, bitcoin in particular, asserting that they could be used for money laundering, evading taxes, and terrorism financing. The president went on to say that bitcoin itself is a pyramid scheme.
Sputnik reported last month that the head of the Central Bank of Russia, Elvira Nabiullina, has said “we are categorically opposed to introducing cryptocurrencies in regulation as a monetary asset.”
While addressing reporters, the Deputy Finance Minister has stated vehemently that the country would not make Bitcoin payments legal.
Several Australia-based FinTech startups have submitted proposals to the Australian central bank and Federal Treasury to create a state-sponsored Australian cryptocurrency, the Digital Australian Dollar.
According to the Australian Financial Review, three prominent FinTech startups, including FlashFX, AgriDigital, and Othera, have approached the bank via the industry advocacy group FinTech Australia, as well as the governmental FinTech Advisory Group. These startups have urged the bank to give due consideration to creating the Digital Australian Dollar (DAD). According to reports, the DAD will be linked to the current fiat Australian currency, and reportedly is set to confirm the country’s growing blockchain enthusiasm, according to FinTech Australia chief executive, Danielle Szetho.
According to Szetho, key stakeholders such as the RBA will ensure a relationship based on trust when Australian users are introduced to cryptocurrencies. While, being linked to fiat currency, the DAD will not be able to undermine the current stability of the current Australian currency.
So far Szetho proved a critical advocate for the cryptocurrency, while also being critical of the Australian government's delay in delivering on their promise to end double taxation in the case of cryptocurrency transactions. The double taxation was finally ended this year.
FlashF, based in Sydney, was one of the pioneering startups which provided financial services to facilitate blockchain related activities. While all three startups have their own tokens, they argued that the DAD would be more powerful than any other digitized version of the Australian dollar, as well as create trust amongst Australian citizens.
According to FlashFX chief enabling officers, Nicolas Steiger, a DAD endorsed by the government would encourage increased trust and certainty amongst users. In addition, implementing the DAD would lead to immense growth in the marketplace. Lastly, it would discourage unofficial parties to release unendorsed digital Australian dollars.
Another advocate for state-backed cryptocurrency is the blockchain startup, AgriDigital, who facilitates transactions between farmers and buyers.
While AgriDigital uses blockchain to record, store, and facilitate transactions, payments are still in the fiat currency. This is mainly due to the volatility of cryptocurrency.
According to AgriDigital co-founder, Emma Weston, a state-sponsored DAD would make payments easier and more convenient.
The last startup, Othera, manages digital loan contracts that are based on blockchain technology. According to Othera’s chief executive, the company is currently pressed to work with existing legacy payment systems in the financial industry in order to process payments from loan borrowers before they can forward payments to the token holders of the contract.
John Pellew, CEO of Othera stated that the current system is a slow and painful process which does not sufficiently utilize the full scope of what blockchain technology has to offer. A DAD would enable all companies to unlock a significantly quicker and more convenient payment technology.
According to reports, the Australian central bank is currently engaged in reviewing the proposals and launching an investigation before they will reveal their decision.
The Baltic region has always been a promising area wherein which cryptocurrency can flourish. The Baltic, which consists of Lithuania, Latvia, and Estonia, is significantly poorer than its Western European counterparts. However, the Baltic has experienced an economic boom in the last decade, partly thanks to Bitcoin and other cryptocurrencies.
This is especially true in Estonia. Estonia, the birthplace of Skype, has always shown innovation in the IT industries. The tech-friendly attitude as well as the economic situation, has made Estonia the prime location to become a prominent Bitcoin exchange market.
Other considerations also factor into Estonia’s cryptocurrency success. Firstly, it is extremely easy to open up a business in the country. In addition, gaining access to the government is equally easy. Expenses for opening an LLC equates to less than $10 000. Due to the convenience of the process, several firms carry the OÜ extension, which is the Estonian equivalent for LTD. The convenient Estonian registration process might also become more widely used in blockchain projects, such as the .io domains are already employing.
Many experts believe that Estonia and their Baltic neighbours could soon become leaders in the cryptocurrency industry. Currently, Russian authorities are employing a largely draconian regime when it comes to cryptocurrency regulation. Considering Estonia's, proximity to the Russia, businesses, and traders will soon look towards the Estonian market to replace the gap left by the Russian market.
To make its position stronger, the Baltic area has a high concentration of Bitcoin full nodes. The nodes are a confirmation of the region cryptocurrency knowledge.
Currently, Lithuania boasts with the most nodes at 66 nodes. This number competes with several other crypto-friendly countries such as the Ukraine, which has 80 nodes, Poland with 66 nodes, and the Czech Republic which has 65 nodes.
While these statistics can not yet compare with cryptocurrency leaders such as Japan, or the US, the numbers are indicative of the countries’ strong position in cryptocurrency. While Latvia only has 16 nodes, and Estonia 10, these countries have confirmed their cryptocurrency leadership in other ways.
In addition to Bitcoin nodes, Lithuania also holds Monero nodes and three Litecoin nodes. While Estonia and Latvia both hold four Litecoin nodes respectively. This puts the area ahead of other tech-innovative countries such as Switzerland.
While comparing nodes alone cannot give us a comprehensive look at a country’s Bitcoin future, it is a good indicator of possible success and dominance.
The area has also been experimenting with issuing their own cryptocurrency coins. Earlier this year, Estonia announced the creation of estcoin, a token based on an Ethereum principle. However, this coin received a lot of criticism, including that of Mario Draghi, the president of the European Central Bank, who was quick to remind Estonia that the official currency will remain the Euro.
Despite the criticism, Estonia continued to operate the e-residence program. Several experts believe that blockchain tokens can co-exist with fiat currency in the future if the currencies do not merge or cross into each other's territory.
Given the openness of Estonia’s e-residency as well as the convenience of starting a business, Estonia has become the most sought-after options for start-ups. Currently, Estonia has less than 2 million residents, which means that they might choose to extend their e-residency to build a worldwide population of over 10 million people.
The e-residency could place Estonia as one of the main blockchain capitals of the world.
Estonia and the other Baltic states have managed to turn their biggest disadvantage into an attractive option for investors. The underdeveloped investment and finance sector, which previously was a burden, has now become a promising option for the cryptocurrency start-up option.
Last week, President of the Russian Federation, Vladimir Putin, led a discussion surrounding Russia’s policy on cryptocurrency activity. The discussion, which included the countries leaders in the finance industry, notably went against current Russian thought as to cryptocurrency’s place in the country.
Up until recently, most Russian finance leaders were strongly against employing or supporting cryptocurrency. Last week, Sergei Shvetsov, the Deputy Governor of the Russian Central Bank, denounced cryptocurrencies as dubious and officially stated his efforts to restrict access to external websites which allow users to trade in cryptocurrencies.
After Shvetsov’s statement, it seemed clear that Russia would follow China’s example and completely block all blockchain technologies and activities within their borders.
However, during the discussion led by the President, Putin stated his support for cryptocurrencies and the possibilities it offers. The meeting was attended by several prominent finance leaders including the Presidential Aide, Andrei Belousov, Finance Minister Anton Siluanov, Governor of the Central Bank Elvira Nabiullina, Deputy Governor of the Central Bank Olga Skorobogatova, as well as QIWI CEO Sergei Solonin.
During the discussion, Putin stated that blockchain technologies offer various opportunities for both organizations and citizens within the finance and banking sphere. Putin expressed his belief that cryptocurrency can make all financial activity convenient.
Cryptocurrency markets around the world have recently endured a tumultuous time. Two major cryptocurrency markets, China and South Korea, have placed bans on domestic cryptocurrency activity while Japan and countries in the Middle East have moved towards more definitive regulation. Despite the volatility, however, experts are still convinced that cryptocurrencies, especially Bitcoin, will continue to enjoy an increased market value.
In the talk, Putin acknowledged the possible dangerous nature of unrestricted cryptocurrencies, especially in regards to it possibly enabling malicious activities. Putin stated that the first concerns are the possibility of money laundering, tax evasion, and terrorist financing. In addition, Putin also mentioned proliferation scams.
However, in addressing these concerns, Putin emphasized that the way forward is regulation, rather than outright banning the otherwise innovative industry. Putin suggested creating a comprehensive regulatory environment which would codify relations within the industry, while simultaneously protecting the interest of both Russian citizens, businesses and providing these with legal guarantees when conducting business within the industry.
Despite Putin’s positive attitude towards cryptocurrency, the industry’s future still remains murky both in Russia and the rest of the world. Several governments and financial authorities across the world have only recently acknowledged the growing need for regulatory systems. Something which is made more difficult by cryptocurrencies’ inherent decentralized nature. While some, like Putin, has called for regulation, others, like the Bank of Finland, do not believe that cryptocurrency can be sufficiently regulated.