Amid global concerns about cryptocurrency regulation from governments and global important players, Russia’s President Vladimir Putin appears to have accepted cryptocurrencies, according to recent comments, while he still has misgivings about the asset class.
Putin told CNBC’s Hadley Gamble yesterday, at the conclusion of his plenary session at the Russian Energy Week forum, that cryptocurrency “may exist as a form of payment.” His answer came in response to a question on whether Russia has taken steps to adopt cryptocurrencies as a means of settling contracts for oil supplies, as Deputy Prime Minister Alexander Novak intimated in June.
Putin stated that, while the option exists, it is currently too early to deploy it in the crude oil trade. This is because, despite their “great value,” cryptocurrencies are still not supported by “anything” and can only be used conveniently as a form of payment, according to Putin.
“Everything develops and has the right to exist – it [cryptocurrencies] may have the right to accumulate, we’ll see. But it’s too early to talk about it today,” Putin said.
He also sees the industry’s huge energy footprint due to the use of hydrocarbons as a problem.
The President’s remarks echo the European country’s general position on cryptocurrency. Russia has long been a bitcoin industry powerhouse, dating back to the days of initial coin offerings (ICOs) in 2016. The industry’s enormous success was one of the elements that drew even more scrutiny to it. While Russia once proposed outright bans on cryptocurrencies, current regulations simply prohibit them from being used as legal money.
For tax reasons, cryptocurrencies are classed as a sort of property under a measure signed into law in January. The measure also makes it illegal to use cryptocurrencies to buy products or pay for services, and it prohibits Russian public officials from having digital assets. It is, however, permissible for Russian residents to pay for goods or services provided by overseas merchants or platforms based in countries with friendlier crypto legislation.
Despite the country’s present less-than-certain regulatory policies, bitcoin use in Russia has skyrocketed. According to Chainalysis data from August, Russia placed second in the adoption of cryptocurrencies such as Bitcoin, adding significantly to Eastern Europe’s supremacy in worldwide cryptocurrency adoption.
Similarly, Russia has established itself as a leading power in Bitcoin mining. Following the major departure of miners from China, Russia is now the third largest contributor to the global hashrate of the Bitcoin network, according to data from the Cambridge Center for Alternative Finance. Russia now accounts for around 11% of the Bitcoin network’s worldwide hashrate.