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Russia’s Digital Ruble Trials Could Make A Debut By 2022

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Russia seems to be gliding ahead with its central bank digital currency [CBDC] plans. The country was seen walking in the footsteps of China as its sprucing up its CBDC game.

An array of countries were seen elevating their efforts towards digitalization. The pandemic undoubtedly paved the way for less human contact and more virtual connections. This further acted as a catalyst for the fast-paced development in the digital sector. The Bank of Russia reportedly revealed that a prototype of the digital ruble would be making a debut by the end of 2021.

Russia Sprints Towards CBDC Development

A local news portal reported that the Bank of Russia would start testing the digital ruble in 2022. Russia was a little late in terms of getting on to the CBDC bandwagon as one of the country’s regulators spoke about the idea of the digital ruble only last October. Nevertheless, Russia seems to be zooming ahead with this plan.

Speaking at an online meeting preceded by the NES, the Deputy Chairman of the Central Bank Alexey Zabotkin said,

“By the end of the year, hopefully, we will be able to present a prototype of the digital ruble platform – some technological platform that can be rotated in the hands, but within which real transactions cannot yet be made. Next year, based on this prototype, taking into account its revision we will already be launching testing rounds.”

The country even went on to seek consultation from the public for the development of the digital ruble. A 48-page paper was released over the prospects of CBDC.

In the meantime, China is moving ahead at full speed with respect to its CBDC development. The digital yuan has been given to the public for testing and two new departmental stores just supported this. Other countries like Japan and the UK are also probing the possibilities of rolling out a CBDC.

Russia To Soon Tax Profits Acquired By Trading Crypto

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The surge in the value of cryptocurrencies has alarmed a few countries like India. But countries like Russia seem to be steering towards the industry by regulating digital assets. The country has been portraying itself as a crypto-friendly country for quite a while now. With an array of investors diving into the business, the government intends to tax the benefits acquired from trading crypto.

The Russian State Duma recently revealed that a bill pertaining to the taxation of crypto was approved.

Russia Now Recognizes Crypto As Property

The draft bill issued by the Russian Federation to tax cryptocurrencies like Bitcoin [BTC], Ethereum [ETH], and the others received a thumbs up from the Committee on State Building and Legislation of Duma. The bill which was approved on 15 February 2021 helped crypto assets in being perceived as property in the country. This would mean that all the profits garnered by the citizens of Russia from trading crypto would be taxed.

With the crypto industry currently valued at a high of $1.54 trillion, several have started trading different cryptocurrencies. However, Russians would have to deal with taxes only if their yearly transactions exceed $8,100 or 600,000 rubles.

The announcement further read,

“The authors of the bill point out that cryptocurrency is often used for tax evasion, money laundering and financing illegal activities. And now the tax authorities do not have information about cryptocurrency wallets opened by Russian legal entities and citizens of the Russian Federation and the operations carried out on them.”

Furthermore, pointing out the repercussions of avoiding these taxes or providing false information pertaining to their crypto transactions, the bill announced a 40% fine on the former and a 10% fine on the latter.

While this seems to be taking off, the central bank digital currency [CBDC] aka the digital ruble of the country could be gaining momentum. Prominent wireless service platforms of the country, MegaFon as well as Beeline are reportedly considering including the digital ruble wallets on to the phones of the citizens of the country.

Russian Opposition Gets Massive Boost From Bitcoin Campaign Donations

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Bitcoin promotes financial freedom and hence campaign contributions using crypto assets are getting more and more mainstream. Amidst the bull season, the crypto-asset is back in a global spotlight. In the latest news, Russian opposition leader and jailed Kremlin critic, Alexei Navalny’s campaign has so far received 658.609 BTC since 2016.

Donations in Bitcoin has helped to make it harder for the country’s intelligence services to track and disrupt its funding against current President Vladimir Putin.

Navalny’s anti-Kremlin movement has accepted donations in the crypto-asset for over four years through its network of regional political headquarters. This year alone, Navalny’s campaign was funded with Bitcoin donations worth $300,000.

With this, donation figures have far exceeded the total amount that was paid in BTC in the year 2020 at the prices at the time.

Back in January this year, Navalny made headlines after he returned to Russia for the first time since being poisoned in Siberia last summer. Following which, he was arrested and slapped with a nearly three-year jail term in a case which he alleges to be” politically-motivated”.

Bitcoin and Russia

Russia has adopted its cryptocurrency law on the 1st of January. As part of the country’s law ‘On Digital Financial Assets,’ [DFA], a decree signed by President Putin on the 10th of December was adopted.

This decree stated how local officials should essentially deal with their cryptocurrency holdings. In short, it obliged two legal initiatives. First which require the country’s public officials to declare their as well as those of their spouse and children’s funds.

Another regulation exists that prohibits certain Russian officials from owning any cryptocurrency, at all. Last December, the the country’s Ministry of Labour and Social Protection published an informational letter reminding some officials that they are obligated to liquidate their digital assets by the 1st of April, regardless of the country of issuance.

Huobi Makes It Easy For Russian Crypto Lovers By Aiding Ruble [RUB] Deposits/Withdrawals

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Huobi Global seems to be eyeing global expansion. While the entire world was in shackles, Huobi was out and about with its functions. The asset entered new markets and revisited old ones in 2020. Now the crypto platform seems to be onboarding new assets as the demand and popularity of crypto have been on a surge.

Huobi Bolsters Its Presence In Russia

The need for digitalization sprung up amidst the COVID-19 pandemic as everyone was confined to their houses. As the world is taking up digitalization more seriously and has been driving towards the same, crypto platforms are evidently well ahead in the game. As the value of cryptocurrencies has increased, thanks to the ongoing bull run, the interest in the industry has sprouted. In order to address these needs, crypto platforms have been upping their games. Huobi Global joins the list as the platform went on to add support for the Russian ruble.

In order to carry this out, the crypto exchange teamed up with a crypto and fiat payment solutions provider, AdvCash. This partnership will allow those holding the Russian ruble to purchase prominent cryptocurrencies like Bitcoin [BTC], Litecoin [LTC], Tether [USDT], Bitcoin Cash [BCH], Ethereum Classic [ETC], Ethereum [ETH], Bitcoin SV [BSV] and several others. The deposit and withdrawal limits for the fiat currency start from 200 RUB and the maximum limit is 100,000 RUB for deposits and 50,000 RUB for withdrawals.

Explaining the process of transactions via AdvCash, the blog post read,

“The whole process of conducting RUB transactions on Huobi through AdvCash is quite simple and straightforward, requiring users to submit necessary identity details for verification on AdvCash before completion. To fund their account with RUB, users will have to just log into their Huobi Global account, navigate to “Deposit-Exchange” option under “Balances” and select RUB from the list of supported currencies to deposit.”

Verification is an essential process, where KYC would be mandated if it has already not been done. The post further revealed that a total of 0.99% deposits and 2.49% on withdrawal fees would be saved by the users during the promotion period.

 

Russia’s Prominent Bank Partners With JP Morgan To Roll Out A Cryptocurrency

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Albeit the government of Russia making efforts to probe the launch of a CBDC, banks in the country have also seemed to have expressed their keen interest in digital assets. One of Russia’s largest state-owned banks revealed its enthusiasm towards rolling out its native digital asset along with a platform that aids in the trading of similar assets. A recent report by Reuters shed light on the launch of this project.

Russia’s Sberbank To Roll Out A Crypto Trading Platform

Cryptocurrencies have been subject to an immense backlash in the past. The assets have been publicly denounced by several authorities across the globe. However, they seem to have recognized the value and prospects of cryptocurrencies. Russia seems to be upping its crypto game. The country’s largest lender, Sberbank revealed that it was soon going roll out a crypto trading platform along with a cryptocurrency, Sbercoin. This project is reportedly the bank’s collaboration with JPMorgan.

The CEO of Sberbank, German Gref suggested that the bank would roll out the Sbercoin sometime next year. Back in July, the Russian government put forth a new law that allowed the trading of crypto, however, prohibited its citizens from employing digital assets as a payment method. Speaking to the RBC, a Russian news portal about that same, Gref said,

“From January 1, the law comes into force, we want to bring to the market our new blockchain platform, which will provide services for the purchase of digital financial assets.”

In other news, the officials at the Russian central bank, Bank of Russia recently revealed that they were against the launch of private stablecoins backed by the Russian ruble. As reported by Russia’s news agency, Prime, the authorities reportedly suggested that developers were allowed to use the central bank’s digital ruble and nothing else. The bank intends to ban private platforms from issuing stablecoins pegged to the country’s official currency.

Russia’s latest move led to several drawing similarities between the former’s and China’s move. China had also issued a blanket ban on stablecoins backed by the yuan. Speaking about the same, the deputy chairman of the Bank of Russia, Sergei Shvetsov said,

“I think that we are not far from this. At least, everything that will be used as a means of payment will be suppressed by us. We proceed from the assumption that the Russian Federation’s means of payment is the ruble.”

Russia’s Digital Ruble May See The Light Of Day By The End Of 2021

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With China on the last page of CBDC ‘s development, several countries have been alerted that the largest populous country is heading towards global financial dominance. Fearing this, certain countries have stepped up the game. Russia is the latest to jump on the CBDC bandwagon.

‘Digital Ruble Is The Future’

In the recent virtual forum, Blockchain Life 2020, members of the Russian parliament as well as the Central Bank’s National Banking Council, Anatoly Aksakov revealed that Russia was keen on developing a central bank digital currency. Aksakov suggested that the digital ruble would be steering towards the testing phase possibly by the next year. He pointed out that consultations regarding the Russian CBDC were carrying on in full swing.

He added,

“I always believed that a digital ruble is the future of all our money circulation.”

The digital ruble would be able to execute several functions of money that would allow it to act as a means of payment, a measure of value as well as a store of value. The Central Bank of Russian further pointed out that a single digital ruble would always equal one cash ruble. The digital ruble would have several functions to carry out, including the tracking of payments and tracking of goods throughout the supply chains.

Several Russian media outlets proposed that the digital ruble would be out and about by the end of next year.

Russian Officials Positive About Blockchain; Skeptical About Crypto

While Russian law has been lenient with crypto assets, it restricts individuals from using it as a means of payment. Almost every country follows the same protocol. Crypto has been outrightly denounced while blockchain technology is shown in a positive light. Russia seems to be doing the same as Aksakov pointed out that blockchain tech was the technology of the future.

However, he highlighted that the pertinent opposition to crypto was garnered from the perils it feigns for the average Joe as well as financial institutions. However, the government is reportedly steering towards incorporating new laws for the better amendment of the crypto-verse. These laws would be put into practice as early as 1 January 2021.

Russian Federation Drops Plot to Outlaw Bitcoin Transactions

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The Digital Financial Assets Bill (DFA), which is scheduled to be read for the second time in the Russian Parliament today, has withdrawn mentions to the administrative and unlawful obligation for bitcoin transactions. The third and ultimate reading will institute the draft as a law. According to the head of parliament’s financial markets committee, Anatoly Aksakov, while speaking to a domestic news outlet, Ria Novosti: “There will be no liability in this bill.” 

Administrative and criminal liabilities withdrawn from DFA bill

Speaking to the media agency, Aksakov noted that the decriminalization of bitcoin investment had been set aside until further notice. He also said: “They have removed everything; there is only a link that the regulation of digital currency will be determined by another law.” The previous edition of the DFA bill intended to introduce financial penalties of up to $7,000 or face seven years in prison.

In addition, the bill suggested penalizing firms that issue or deal with cryptocurrencies without the authorization of the Russian central bank. The proposed financial penalties amounted to approximately $28,000 for violations of the Bitcoin Transactions Act if it is used as a means of payment for goods and services. Initially, the original bill proposed that firms would have to pay up to one million rubles ($13,900), while individuals would be fined at least 200,000 rubles ($2,800) for transactions in virtual assets to pay for goods and services.

Lawmakers planning “special law” to outlaw bitcoin transactions

Moving forward, Aksakov noted that the current draft bill, in its amended structure, now only concerns the challenges surrounding the definition of digital financial assets; and spells the standards for dealing with blockchain tech, among other issues. Besides, Aksakov, who is in charge of sponsoring the bill, anticipates the proposed law to be enacted on January 1, next year after adopting the second and third readings during the State Duma spring section that ends on July 23.

Legislators in Russia are also working on another “special law” on cryptocurrency policing, which may introduce strict penalties for dealing with bitcoin transactions. According to Aksakov, the law could be adopted during the autumn session, which ends in December. Digital currencies in the Russian Federation remain vague. The legality of ICOs, Smart Contracts and Crypto Mining lacks a clear definition despite the high number of proposals submitted to the legislature for this intention.

Russia’s Proposed Crypto Ban Opposed by Ministry of Justice

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Russia’s proposed ban on crypto, which seeks to restrict all crypto-related activities within the Russian Federation, has suffered yet another setback following a negative review by the government’s vital arm.

Russia’s Ministry of Justice challenged the newly proposed bill seeking to ban cryptos on 16 June, exactly seven days after Russia’s Ministry of Economic Development also issued a scathing criticism of the bill. The new bill was proposed by the legislators back in March, but it is believed to be the original idea of the nation’s central bank.

Russia’s proposed crypto ban criticized by both the public and government bodies

The Russian central bank is known to be anti-cryptocurrencies and does not support the use of digital currencies. After being revealed, the new proposal seeking to prohibit individuals from using the country’s necessary facilities to run any crypto-operations was met with some cruel reviews from the Russian cryptocurrency community. 

Notably, the proposal seeks to bar Russians from utilizing the country’s infrastructure to conduct, run, or operate any crypto-related activities. However, individual people will be allowed to inherit digital assets or receive them due to the counterparty’s bankruptcy procedure. Additionally, cryptocurrencies can be seized like any other property by a court order.

More clarity required

According to Russia’s Ministry of Justice, the bill does not clarify the justice system on what to do with confiscated digital assets. Under normal circumstances, marshals sell the confiscated assets through auctions, but with crypto transactions being prohibited in the country, this will be impossible. 

Instead of the standard procedure, the Russian Ministry of Finance proposes that a government agency be assigned to assist Russians in selling their cryptocurrency holdings overseas. Meanwhile, Anatoly Aksakov, the sponsor of the draft bill while speaking to Tass news agency, stated that the draft bill on digital securities is already finalized. It is only awaiting to go through the final reading.

Illegal Crypto Mining in Russia Costed Taxpayers $6.6M in Over 3 Years

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Illegal crypto mining operations in the Russian Federation have stolen electricity worth nearly $6.6 million in the last three years. According to state-owned power distributor,  Rossetti, illegal mining farms, compromised power meters and underground mining farms helped illicit cryptocurrency miners to illegally consume 450 million Russian rubles ($6.6 million) worth of electric power from the domestic power providers.

The electricity firm disclosed the figure on its official Telegram channel. The firm has been hunting ‘black mining sites’ that do not have any sort of deal with power companies, but still use the national electricity grid to mine digital currencies without paying. 

According to the firm, black mining sites are usually based in the office of already established businesses including factories where the owners want to earn extra funds. Additional black mining sites include actual food farms, garages, strategic sites in the woods and leased offices.

According to Rossetti, the illegal miners would pull an electric cable to the closest electricity line and develop their own power transformation stations. For instance, in one of the discovered black mining sites; the power transforming station was found underground buried under a public forest; as per the power distributor.

The state-owned power company has discovered 35 illegal mining operations from 20 different regions in Russia since 2017. According to Rossetti, each of those cases have been reported to law enforcement. 

“We closely analyze the consumption patterns looking for anomalies, inspect the power lines and measure the workload of the stations. Sometimes it’s easy to notice a mining farm by visual signs, like when a building has powerful air conditioning devices and fans installed,” said Rossetti. 

Illegal crypto mining has been rampant in Russia

Over the past one year, people have been minting digital currencies illegally in Russia at a nuclear research institute and utilizing the website of a domestic utilities solution provider. On the other hand, Rossetti has been researching on how to utilize the same technology; to discover new ways of using distributed ledgers to effectively amass power consumption data. 

Blockchain Voting System to Determine Russia’s Next President

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The citizens of Moscow will be able to decide whether or not Vladimir Putin stays in power for some more 12 years using a blockchain voting system. Only two regions have been confirmed to use the blockchain-powered electronic voting system, Moscow and Nizhny Novgorod.

In March, Russian lawmakers approved adjustments in the constitution that would allow Vladimir Putin to lengthen his presidency for two more six-year terms. However, the public’s constitutional amendment has to be ratified in the next voting slated to take place on July 1.

Blockchain voting system is “almost impossible to hack”

Back in 2019, a blockchain-powered e-voting system was launched in Russia. Just a month before the poll exercise, a French security researcher unearthed a severe weakness on the system, which raised doubts about the technology’s trustworthiness. Experts claimed that the old system could be compromised in less than 20 minutes using openly available software on typical computers.

Nevertheless, the Central Election Commission (CEC) reviewed the use case of the technology for the upcoming elections on a case by case basis. As per the announcement, the blockchain voting system will encrypt and conceal every vote to protect the identity and immutability of data. As a single server does not host the blockchain, making the electronic voting system is “almost impossible to hack.”

“The safety and transparency of electronic voting will be ensured by blockchain technology. Such a network does not have a single server: in order to change the information regarding bulletins, it is necessary to obtain the approval of most network participants, so the chain is almost impossible to hack. The vote itself is anonymized and encrypted.”

Blockchain technology for safety, anonymity, and satisfaction

The blockchain voting system boosts anonymity features that have led most governments to opt for it. Furthermore, the technology has the capability of accommodating multiple users at once. According to the announcement, the voting system will accommodate up to 10 million voters at once.