Putin Expresses Eagerness Around Blockchain, Apprehension About Inherent Risks
Speaking today at a meeting focused on cryptocurrency in finance and banking, Russian President Vladimir Putin told reporters, “We should use advantages provided by new technology solutions in the banking sphere. It is certainly important at the same time not to make extra barriers; required conditions should be created instead for further growth and improvement of the national financial system.”
Additionally, he said:
“Modern technologies in the banking sphere definitely open new opportunities for organizations and citizens, make business activity and daily life more convenient also. Virtual [currencies] or cryptocurrencies are becoming and have already become more popular. They have already become or are turning into a full-fledged payment instrument and an investment asset in certain countries.”
The head of state’s sentiments around the use of blockchain technology in the financial sector were not all positive, however. He qualified his optimism by cautioning that the “use of cryptocurrencies also carries serious risks,” including money laundering, tax evasion, the financing of terrorism, and fraudulent schemes targeting laypeople. Elaborating on his apprehensions, he said that “crypto-currencies are issued by an unlimited number of anonymous bodies. Thus, buyers of crypto-currencies could be involved in unlawful activities.”
The state’s role, he posited, should be to develop a regulatory framework that makes “relations in this sphere systemic”; protects Russian people, businesses, and government institutions; and provides “legal guarantees for work with innovative financial instruments.”
Putin also disclosed that he is aware of the Russian central bank’s position on the risks associated with cryptocurrency, having discussed the topic several times with the bank’s governor.
Earlier that day, the Bank of Russia’s first deputy chairman Sergey Shvetsov proclaimed that, “We consider all cryptocurrency derivatives to be a negative development on the Russian market,” explaining that the bank intends to “restrict potential operations with such instruments made by the regulated part of the Russian market” and to inhibit external actors from making such assets available to the Russian public by preventing access to their websites.
In July 2017, the US Commodity Futures Trading Commission granted American firm LedgerX authorization to “provide clearing services for fully-collateralized digital currency swaps,” but to date, no regulated cryptocurrency derivatives have begun trading.
Shvetsov also said that in light of Bitcoin’s popularity as a means to make significant sums of money in a short amount of time, “it has signs of a financial pyramid.” He added that the bank is currently weighing strategies that would allow Russians to buy cryptocurrencies risk-free.
In an interview announcing the meeting with state media, Putin’s press secretary, Dmitry Peskov, reported that “It is obvious that work in this area will be carried and will be carried proactively.”