In recent news, Russia has reiterated its stance on Bitcoin and the cryptocurrency market. Its continued rejection of the market comes from the massive amount of cyber threats related to cryptocurrency the Russian Federations has suffered from in just this year.
Due to the crypto industry’s success and slow integration towards the mainstream, it has caught the attention of the public, both good and bad. The company ESET simply stated that the booming crypto market brought out cyber criminals.
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Cyber Threats on Russia
In a report by Bitcoin.com News, Russia received 8.9% of all crypto-related cyber-attacks in 2021, while the second and third place has a considerable gap with 5.6% and 5.3% for Thailand and Peru, respectively. The boom in cyber threats come from the crypto industry’s value increase. It was noted that cybercriminals are only focusing on popular cryptocurrencies at the moment.
According to ESET, a Slovak internet security company, the main driving force to the cyber threats are the crypto mining software. The company has noted a significant increase in attacks involving Ethereum (ETH). Igor Kabina, a Senior Detection Engineer in ESET, claimed that crypto-related crimes are relatively tied to the recent ransomware. More importantly, the anonymity provided by the industry reassures users that there won’t be any risk of their identity being revealed.
Russia’s Stance
In 2020, the Russian Federation held a conference where the country passed its first law to regulate crypto assets. Prosecutor General Igor Krasnov said that cryptocurrencies being used by criminals call for the enforcement of the law. He also added that crypto is being used for bribery, so it’s more complicated to trace it compared to fiat currency.
As a result, Rosfinmonitoring, Russia’s financial surveillance body, will be used to trace cash-outs and add classification codes to suspicious transactions involving cryptocurrency. The country has also added crypto in its legal system and deemed it taxable property last year. In addition, public officials are forbidden to own any crypto assets starting in 2021.
Although, other industry experts claim that crypto confiscation might be impossible for Russia as digital assets kept in wallets would be quite difficult to confiscate compared to other types of assets.
Russia’s CBDC
Bank of Russia’s Governor, Elvira Nabiullina, stands by the country’s stance towards cryptocurrency and even went as far as calling it “fake money” and should not be used for any legal settlements within the country. On one hand, though, Governor Nabiullina is quite positive towards the central bank’s central bank digital currency (CBDC) project.
Russia’s central bank is testing a digital currency to ensure that banks’ systems can adapt. Russia is wary that digital currencies might lead to considerably larger banking monopolies than presently exist, crowding off competition. Governor Nabiullina also expressed worries about the formation of even larger too-big-to-fail banks, which may be applicable in other nations.
Banks may use smart contracts to create ecosystems around existing payment platforms and add new services. Nabiullina argues that these platforms should be compelled to accept a local CBDC as well as to create stablecoins tied to local fiat currencies. The goal is for all of these ecosystems and networks to be required to support a CBDC, resulting in interoperability.
Conclusion
As of right now, Russia’s take on cryptocurrency is understandable given the impact of the industry on their citizen’s safety. While some might see it as Russia being slow on the trend uptake, these are decisions made by the Russian government’s authorities after reviewing cryptocurrency, adding the risky volatility and privacy concerns in crypto, it’s no wonder so many are sceptical.
Governor Nabiullina even predicted that there will be challenges to find a common solution between every country’s systems. With the current de-dollarising trend happening, she added that changes will happen, but not very fast.
