Previously, the Russian government has looked more progressive when it comes to the potential value of cryptocurrency. Russia became the first super power to publicly state that it sees a place for a State backed cryptocurrency in the future. It’s not necessarily a good or bad thing: there are merits and dangers in both directions. But regardless of all previous speculation and rhetoric, earlier this month, Russian legislators began drafting legislation to outlaw the use of cryptocurrency as a ‘currency’ substitute. Russian previous steps forward to a cryptocurrency involved future are now on a track to squash decentralized cryptocurrencies, as many feared.
The Money Surrogate Bill
At a recent conference held by Vnesheconombank, the Russian Ministry of Finance proposed to criminialize the ‘turnover’ of ‘money surrogates’ in what has been dubbed the ‘Money Surrogate Bill’. The objective of the Bill is to ensure the ruble’s future in an ever polarizing global currency economy; however, it’s clear that cryptocurrency is within the government’s sights.
Constitutionally, ‘money surrogates are prohibited’, but this hasn’t translated to administrative action yet. It’s with this proposed Bill that the Ministry of Finance hope to outline penalties for using a medium posing as a currency to purchase goods or services in Russia. The leader of the Russian central bank is vocal in the strict catchment of what is considered a ‘surrogate’, stating that ‘[t]here is the ruble, and everything else is a surrogate.’ It leaves little room for misinterpretation, yet further, it’s stated that, specifically: 'cryptocurrency which acts as a private money is a money surrogate.'
This is the first significant push by a large government to ‘outlaw’ cryptocurrency. It should worry us all.
States in the west have taken an semi-apathetic and somewhat pragmatic approach in regulating cryptocurrency: seeing cryptocurrency as no significant threat to traditional currencies (self evident by the 'asset' classification). The Russian approach is different, perhaps to match a different national zeitgeist in a country known for financial systemic nepotism. This is the first occasion that citizens (of a country which understand the power of blockchain technology and cryptocurrencies in general) have been attacked through legislation. And not just with regulatory chains, but actual criminalization of the use of cryptocurrency. Related: Gold Investors Shouldn’t Expect A Replay Of 2008
It will be nearly impossible to enforce for those already active in the community, but the effect on adoption in Russia may be crippling, as those looking to enter the market may hold back in the light of the fear. Shops may need to stop accepting cryptocurrency as payment. What could the on-flow effect be for the value of cryptocurrency in general?
The Russian use for cryptocurrency will then become an exchange driven ‘asset’ class. One that can’t be used to buy coffee on the street, but can be traded once an account is created at an exchange. These exchanges harvest personal information to the very limits of what a person is willing to fork over. Many exchanges take more personal information than a State department takes when applying for a passport. ‘Know your customer’ laws ensure there is an entity endpoint which can provide transactional information to a government. With this Bill, the Russian state looks to ensure all cryptocurrency remains driven in a strictly 'exchange' ecosystem.
How could the criminalization of cryptocurrency use be enforced? Would all cryptocurrency apps in the RU app store be removed? The Putin regime use fear as their tool, and following a few ‘examples’ made out of some sorry Russian nationals, it’s unlikely citizens will want to take the chance of being caught purchasing anything with Bitcoin.
It’s difficult to say whether this move will have a spill over effect to democratic nations, but it’s undoubted that each government will watch the path of the ‘Money Surrogate Bill’ with interest. When a State backed currency is threatened – thus the State’s ability to print money and value its assets – it’s hard to see any other route other than outlawing the threat to neutralize it. It’s where draconian speculation starts running away from a news item, but it’s something to which we are slowly becoming accustomed.
Regulation: East vs. West
It is highly likely that ‘regulation’ will start to boil and evaporate into a fog of criminality. And the difference is stark. The very nature of what is criminal comes into question. Is it criminal to create an inflationary system which benefits the few, built on debt and needless suffering? Or is it criminal to stand up to an unjust system with a equitable solution by way of cryptocurrency?
This is a Russian Bill. But it will likely become Russian law. And although the effects may not seem wide, remember this is a global currency. Cryptocurrency is effected by every governmental decision, by every node, and by every user. What happens if an incarnation of this Bill stands up in the lower house or the senate floor?
The generations before us physically explored the waters of the world and drew lines on a map. We explore, too. But our boarders are digital and our lines on a map are the sentences in digital rights legislation. Will innovation trump bureaucratic power?
By Con Duncan via Crypto Insider
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