Alexander Abramov, Roman Abramovich, Roman Trotsenko, and Igor Rybakov are among the many Russian billionaires who are jumping on the crypto-train, prior to the upcoming introduction of the first state-backed cryptocurrency, the CryptoRuble. This should not come as a surprise.
To date, Russia has consistently taken a rather hardline on cryptocurrencies and Bitcoin in particular:
- 2015 – Russian authorities impose media censorship of Bitcoin promotion,
- January 2016 – Chairman of Russia’s Investigative Committee: Russia supports criminalization of Bitcoin and cryptocurrencies,
- November 2016 – Central Bank of Russia considers Bitcoin illegal,
- October 2017 – Russian Government to regulate ICOs and Bitcoin mining by mid-2018; Russian Central Bank Endorses CryptoRuble,
- November 20, 2017 – Russian Minister of Communications and Mass Media: “Russian law will never consider bitcoin as a legal entity.
However, on November 21, 2017, The Bell, a Russian business news website, reported this is not stopping many Russian Billionaires, including Alexander Abramov, Roman Abramovich, Roman Trotsenko, and Igor Rybakov, from investing hundreds of millions into various crypto-platforms such as Blackmoon Crypto.
As is common of controversial political issues in Russia, details are scarce and often contradictory. That said, a few things can be surmised; as recent coverage of the shell company leaks (Panama and Paradise Papers) has revealed, Russian billionaires and members of upper society are often intimately involved with those at the highest levels of government. This being the case, it is likely these billionaires are operating based on inside knowledge of internal Russian political agendas and are not investing in crypto-platforms that are, or will be, deemed illegal in Russia. Although, the later remains a distinct possibility also, due to the rampant criminality at the highest levels of the Russian kleptocracy (US State Department has referred to Russia as a “Mafia state”).
According to Trotsenko, the billionaires are “not interested in investing simply in bitcoin; we are engaged in infrastructure.” Perhaps they intend to convert these existing platforms into the backbone infrastructure dedicated to operating the upcoming CryptoRuble? If this turns out to be the case, a bunch of Russian billionaires in direct control of the country’s cryptocurrency, this should surprise no one.
Even if this turns out not to be the case, the yet unreleased cryptocurrency is sure to be, nonetheless, firmly under the control of the Russian Government. Aside from this, not much is known about the cryptocurrency at the time of publication. Apparently, it will be exchangeable with the fiat Ruble, though exchange details are not known. Will it be pegged one-to-one with the Ruble? Apparently there will be a 13 percent tax on “undocumented” CryptoRubles? Will this be the government’s cut on any criminal transactions conducted using the currency?
Much uncertainty still surrounds the world’s first officially proposed government-backed cryptocurrency. But, if Russian political history is any guide, the CryptoRuble in all probability will be stripped of the most powerful features of Bitcoin (any many of its derivatives); decentralized governance, (potential) anonymity, non-inflation. My question is, besides a failing government’s desperate attempt to maintain its stranglehold on a country, what purpose does yet another gutted cryptocurrency serve? And what difference does it make if it is state-backed?