Taking a jibe at cryptocurrencies, Russian Prime Minister Dmitry Medvedev has said on 16 May, to a Russian news agency that cryptocurrencies are not much of a threat any longer and that they don’t need regulations as they are losing popularity among people.
According to the prime minister, cryptocurrencies have lost their spark as they are of no more interest for the population anymore. He has stated that the decrease in public interest also diminishes the need for crypto regulations. He said:
The popularity of cryptocurrencies has decreased so far, which likely makes the regulation issue not that relevant already.
Medvedev made this statement during the opening of the St. Petersburg Youth Union of Political Entrepreneurs. He said that some necessary legislation should be implemented for crypto, and even though the price of bitcoin is falling, there is still an opportunity for other cryptocurrencies to rally. The news comes after the crypto market has seen a major comeback since April with the price of Bitcoin almost doubling from $4,000 to more than $8,000 earlier this week and settling at nearly $7,312, at press time.
This statement doesn’t come as a shock to many crypto enthusiasts as Medvedev has been one of the premier critics of cryptos in the Russian government. Medvedev also attended a session of the Russian Parliament in 2018 dedicated to drafting crypto laws. After the session, Medvedev while talking to the press said that “we need to establish basic provisions in civil law, translate such slang expressions as a token or cryptocurrency into the language of the law”. The Russian Parliament in the session agreed that there’s a need for crypto regulation. Explaining the parliament’s decision the Chairman of the Cabinet of Ministers said:
“New regulations in this area will help settle judicial protection against abuse… especially important in the fight against the legalization of proceeds from crime. On the other hand, the attempt to absolutely regulate everything in the digital sphere is counterproductive and unreal, because the world is changing very quickly and you need to have flexible legislation,”
Has Crypto Lost its Popularity?
As much as Medvedev would like to think, cryptocurrencies are still going strong as ever. Over the past month, the price of cryptos has seen a massive surge. Since 1st April, 2019, the price of Etherum has almost doubled from $120 to more than $240. Cryptocurrency market did crash at the end of 2017, and many cryptocurrencies lost their value quite considerably; however, cryptos didn’t die as a result. Sure, the market lost investor confidence during 2018 it has since recovered much of its value and is recovering fast.
Bitcoin, the most prominent cryptocurrency, is on a roll too. The crypto has gained more than $3,000 in value in a month. It is projected that the cryptocurrency will surpass its previous peak of $19,500 by next year in 2020. The next bitcoin halving is also expected to occur next year. Bitcoin halving is a fixed event that happens after 210,000 blocks of bitcoin have been mined. The halving event slashes the amount of bitcoin received by the miners to half. For example, if miners receive 12.5 BTC per block, they’ll then receive 6.25 BTC per blocks after halving. This event is surely going to create a sudden surge in bitcoin’s price as mining costs would surely create a supply-demand gap.
Russia’s Relation with Crypto
The Russian government has never been a fan of cryptocurrency and cryptic freedom in general. The country has tried its hand on regulations many times but has not taken any strong action against cryptos as of yet. In 2018, a bill was passed by the Russian Parliament, but it was later scrapped after it was found that it lacked major key crypto concepts such as mining. The Russian government has been critical of bitcoin and cryptos from the start. The finance ministry considers bitcoin as fraudulent currency and believes that only the central bank has the right to issue currency. In a statement, the finance minister of Russia said this about banning bitcoin:
This is necessary to protect Ruble as the single legal means of payment in Russia
The Russian government is known for imposing restrictions on its citizens. Just last month, the country unveiled plans to create a firewall to censor all incoming and outgoing traffic over the internet. The move also gave the government the means to record any transaction made on the bitcoin and other crypto ledgers. Thus, taking away the anonymity away from the decentralized currency.
The Russian people have been using crypto and blockchain as a tool to fight against the government’s power grab. More than 600 bitcoins were donated to the election funds of Alexei Navalny, Putin’s primary opponent in the presidential race. The Russian government sees bitcoin as a tool for money laundering and corruption. The government is of the view that bitcoin and other cryptos are enabling traffickers to smuggle money out of Russia.
Putin’s Push For Regulation
The delays in crypto regulations haven’t gone unnoticed by Russian President Vladimir Putin as he ordered the Russian government in February to enact crypto regulations by July 2019. The order was written in a document published over Vladimir Putin’s website. Putin has been a critic of crypto for a long time. In 2017, he expressed his doubts about the cryptocurrencies in an official meeting in the following words:
Virtual [currencies] or cryptocurrencies are becoming and have already become more popular. They have already become or are turning into a full-fledged payment instrument and an investment asset in certain countries. At the same time, the use of cryptocurrencies also carries serious risks.
The document uploaded on Putin’s website also discussed the formation of federal laws aimed at digital assets. The laws would be aimed at creating the next generation economy by determining the rules and procedures of electronic transactions and digital asset swaps . The government, according to the regulations proposed, would require every crypto trader to have a government certificate and an economics degree. The central bank would also limit the number of cryptocurrencies an investor can purchase. Moreover, no trader would be allowed to trade cryptocurrencies without a qualification certificate.