Putin: Russia Should Explore Blockchain to Avoid Finance 'Limitations'

Russian president Vladimir Putin is still skeptical about cryptocurrencies, he said Thursday.

AccessTimeIconJun 7, 2018 at 8:51 p.m. UTC
Updated Sep 13, 2021 at 8:02 a.m. UTC

The Russian government has taken a cautious approach to cryptocurrencies, president Vladimir Putin said during an annual "hotline" on Thursday.

Asked if Russia will have its own cryptocurrency one day, Putin said he doesn't see such an outcome as possible because cryptocurrencies "by definition are beyond the national borders."

While expressing that caution, he nonetheless admitted that cryptocurrencies are "developing in the world" and that Russia should explore the opportunities around the tech. Among the possible uses, he said, was to "avoid various limitations in global finance trade" – a suggestion that blockchain could help ease sanctions against Russian banks, companies and individuals imposed in recent years.

Putin also noted during the four-hour annual session that cryptocurrency mining – the energy-intensive process by which new transactions are added to a blockchain, with new coins being "minted" in the process – is not regulated, and similarly, cryptocurrencies are not recognized as legal tender within Russia.

The Russian president notably issued a series of mandates last year to Russian officials, calling for regulations around cryptocurrencies, including the country's domestic mining sector.

"Somewhere in Japan they are using it, but it doesn't work in other countries," Putin remarked on Thursday.

Legislative slow-walk

His comments come as Russia's legislature slowly weighs several measures related to the technology – something that Putin himself has expressed support for in the past.

Three bills regarding blockchain and crypto have been introduced in the Russian parliament, the State Duma, to date. Two of them passed the first round of hearings on May 22 (three rounds are required to pass the bill), one of them named "On the digital financial assets" and the other "On the digital rights".

Both bills aim to introduce basic blockchain terminology to the Russian legal language, such as tokens and blockchain. They also restrict cashing out of tokens to authorized finance institutions and assign the Bank of Russia as a regulator that should control the crypto trade and ICOs in the country.

One more bill, "On the distributed national mining" – which introduces the term "cryptoruble" – was rejected by legislators.

Michael Komin, an expert for the institutions development with the Center for Strategic Development – a Moscow think tank chaired by Alexei Kudrin, a former head of the Department of Finance and one of the proponents of blockchain technology in Russian establishment–- believes that the bills are "half-empty" because an adequate legal language for blockchain hasn't been created so far.

"The only thing the parliament can do is to ban the technology as such, but it won't be approved by the Bank of Russia, Department of Finance and Treasury, which are already using elements of blockchain, and by the President Putin's advisor Andrei Belousov, " Komin said.

He expects the current blockchain bills to get "left without movement until better times and finally perish under the piles of other bills."

Image Credit: Channel One Russia


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