Russian president Vladimir Putin has knocked back his central bank’s pitch for stricter restrictions on crypto, reports Bloomberg citing three sources familiar — while jailed critic Navalny continues fielding Bitcoin donations.
Putin is said to be supportive of taxing and regulating crypto mining across Russia, which boasts surplus energy in multiple regions.
“We also have certain competitive advantages here, especially in the so-called mining,” said Putin in a recent government meeting (via Bloomberg). “I mean the surplus of electricity and well-trained personnel available in the country.”
Putin urged Moscow and the Bank of Russia to quickly reach an agreement on how best to regulate crypto moving forward. Russia ranked third among countries for Bitcoin mining activity as of August.
All this is despite a central bank report that claimed crypto resembled a pyramid scheme. Russia’s Federal Security Service had lobbied Bank of Russia head Elvira Nabiullina for a blanket ban on crypto assets.
The Speaker of Russia’s lower house of parliament, Vyacheslav Volodin, recently indicated that the State Duma would prioritize a regulatory framework for crypto during its spring session.
Russia’s Federal Security Service (FSB) also issued warnings regarding crypto remittances, targeting undesirables like media resources that Moscow labels “foreign agents.” The use of crypto for payments was banned across the country in 2020.
The FSB also pushed crypto restrictions to curb donations to media and organizations opposing the Russian government.
Navalny crew quickly withdraws Bitcoin from war chest
Russia has historically levied stiff fines against foreign media companies that refused to remove unpatriotic content. Some Russian media outlets like Meduza must register as a “foreign agent” and make financial disclosures.
Meduza publisher Galina Timchenko said crypto donations account for about 3% of its revenue. “We have to post this warning on every scrap of Meduza’s content,” says the disclaimer on Meduza’s donation page.
But jailed opposition leader Alexei Navalny, who organized protests against Putin’s government, is perhaps Russia’s most prominent politically-motivated Bitcoin user.
Protos previously reported Navalny supporters had donated 3.5 BTC ($120,000) worth of Bitcoin during protests calling for his release last January.
At the time, Navalny’s crew had in total received 729.9 BTC ($25 million back then, $27 million today) since it began welcoming Bitcoin donations in 2016.
Although, blockchain data shows any Bitcoin contributed is quickly taken out. It’s not exactly clear where the Bitcoin donations end up.
Still, we calculate Navalny’s team overall has stood to generate around $4.5 million if BTC was converted to fiat when withdrawn.
Protos now confirms that Navalny’s Bitcoin addresses have garnered more than 9 BTC in the past year, all while the Kremlin critic serves a three-and-a-half year sentence at a prison labor camp in Vladimir, north east of Moscow.
Navalny’s Bitcoin donations in the past year are currently worth nearly $332,000, but if sold upon withdrawal they would’ve fetched about $550,000.
Bank of Russia can’t stop Bitcoin
Regardless of whether Putin decides to ban Bitcoin, the world’s top crypto has a history of responding to sovereign bans.
In 2017 and 2018, Bitcoin’s price collapsed after government officials from China and India proposed bans.
Russia already bans crypto payments, although Russians can trade crypto assets on foreign exchanges. The Bank of Russia’s recent report called for a crackdown on individuals and businesses that ignore payment rules.
The Bank of Russia also claims that crypto mining hurts Russia’s ecological agenda and jeopardizes its energy supply.
Despite numerous bans, residents of China, India and Russia have continued to purchase Bitcoin. Russia’s security services say Russians hold approximately $90 billion in digital assets and control 17 million digital asset wallets.
Correlated or not, crypto markets have shed over $300 billion since the Bank of Russia pooh-poohed Bitcoin last Thursday.
But Bitcoin has developed resilience to politically performative warnings that often lack teeth. This time is likely no different.
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