Like China, Russia has an on again, off again relationship with crypto. At times the government embraces it while shunning it at others. In fact, it seems the trend is to do both simultaneously.
Russia was obviously affected by the actions of the US Government. In particular, the weaponizing of SWIFT by the West has sent countries looking for alternatives. This is going to end up being one of the more impactful moves by the US and its allies.
There is already another option for SWIFT. This is only increasing in activity. However, it might be crypto that ends up breaking the stranglehold.
Here is where Russia is mirroring the West.
The government is turning to cryptocurrency to get around the power structure of other countries yet trying to control it with regards to its population.
We see this happening across the board. The arrogance of governments, made up of politicians and bureaucrats, is ever present.
Ultimately, I foresee crypto winning out. The age of decentralization is coming. The technological trends are such that these efforts will prove fruitless in the long run.
In the meantime, we will focus upon the next step Russia is taking, diving deeper into cryptocurrency.
Russia Diving Deeper: Plans State Crypto Exchange
Cryptocurrency hasn't proven to be the full escape hatch for Russia. There were $30 million in stablecoins that were "frozen" by Tether due to the ties to Russia.
Centralized entities behind crypto issuance is still a problem. However, this is still built on top of blockchain base layers, something that holds the solution.
Russia decided to take matters into its own hands. The country is now working on setting up a state run crypto exchange. Obviously, this is not the magnetic field of freedom most within crypto are attracted to.
That said, it does exemplify something very important. We will get to that in a bit.
Before that, let's see what Russia is doing.
Finance Minister Anton Siluanov announced in a ministry board meeting that his ministry will cooperate with the Central Bank of Russia to open a cryptocurrency trading platform. This exchange will have an experimental legal framework and cater to only “highly qualified investors.” Siluanov explained that this is meant to “legalize crypto assets and bring crypto operations out of the shadows.”
The announcement represents a significant shift in Central Bank policy, which has long opposed the adoption of cryptocurrency. The bank had put forward a proposal on March 11 to the government to allow for cryptocurrency trades by a new set of investors who are very well off.
It seems the country is getting into the game, looking to keep pace with other nations that are trying to be major players.
Another similarity to the West, this is not inclusive. Like most financial systems, it is exclusionary.
According to reports, the government is set to limit access to this new crypto exchange to persons of outstanding wealth. The Central Bank suggested that “highly qualified investor” status would be reserved only for those whose investments in securities and deposits are over 100 million rubles (around $1 million), or whose incomes for the last year were in excess of 50 million rubles (around $500,000).
For those in the United States, this should sound very familiar. It is the "accredited investor" level, where $1 million is required to get involved in certain investment opportunities.
Russia Freeing Itself
It is odd to think of a state run exchange as freedom. The key here is to think about the perspective it is coming from.
From the government's perspective, the oppressor is the West. That is what the Russian leaders are trying to circumvent.
By establishing its own exchange, there is no intermediary that can stop transactions. Many blockchains are operating outside the reach of national governments. Bitcoin, Ethereum, and others can be swapped without issue. Exchanges, on the other hand, do become a challenge.
Here is where Russia is opening things up. It is saying, we will built it ourselves. This provides access to whomever the Russians deem favorable without hindrance. The West has no ability to stop the interaction with these assets.
Ironically, Russia is following the same mindset of builders in the crypto industry. One of the long held beliefs, which is accurate, is that as non-controllable infrastructure emerges, freedom from the traditional system is achieved.
Of course, the Russian government has a viewpoint of freedom that is a bit more self-focused but the concept is there.
In Russia, citizens are allowed to buy and hold cryptocurrency. They are not allow to use it for payments, which is an odd way to look at things. The major challenge is that users are dependent upon external exchanges.
For those who are qualified within Russia, this move is likely of benefit. Naturally, this is not the majority, showing how perhaps Russia can be like the West.