In a widely cited April 10, 2017, Bloomberg News interview, Russian Deputy Finance Minister Alexey Moiseev indicated that the Russian government is considering a change of position regarding . Until recently, Russia’s government has been firmly opposed to the use of such digital currencies as Bitcoin, even threatening Russian users with potential incarceration. Some cryptocurrency industry experts credit news of this Russian change in perspective as being a contributing factor in the ongoing surge in Bitcoin value.
Russia’s Perspective Shift
One of the primary reasons the Russian government opposed cryptocurrencies was concern that the use of digital currencies facilitated criminal financial activities, including money laundering and illegal money transfers. Money moving outside of the traditional monetary system can be used to fund the operations of organized crime and terror groups. However, with the rapid rate of financial technologies advancements and the widespread adoption of crypotocurrencies as legitimate financial instruments, Russia is reconsidering its position.
Perhaps in recognition that cryptocurrencies are not going away, the Russian government is looking at ways of regulating and integrating digital currencies into their existing financial system. Instead of opposing cryptocurrencies because they could be used in undesirable ways – as can cash and other legal financial instruments – the Russian government is looking at ways to reduce the potential for illegal use. Indeed, digital currencies like Bitcoin are supported by block chain technology that serves as a sort of permanent ledger that records transactions, a valuable means of tracking money that cash just doesn’t offer.
Another factor that may be contributing to the Russian government’s willingness to work towards legalizing digital currencies is the desire find viable alternatives to the US dollar. As the world’s primary reserve currency and its role in the oil markets, the US dollar has long dominated international trade. Russia and China are just two of the world’s nations actively seeking other options. Legitimizing digital currencies can open up other means of transacting business on a global scale without having to use the US dollar.
Bitcoin Market Impact
As Bitcoin use becomes more widespread, particularly with national governments legitimizing and supporting that use, the market for this digital currency is impacted. That is because the more integrated into global finance systems digital currencies become, the more stable they become as mediums of storing financial value and mediums of exchange. When major governments work towards regulation, that feels safer for investors, encouraging investment and further strengthening the digital currency markets.
Bitcoin has enjoyed a remarkable surge in value this year, according to an April 2017 CNBC report. Published on April 12, the report explained as the world’s nations develop regulatory strategies for integrating digital currencies into existing financial systems, it is likely that digital currencies like Bitcoin will experience fewer dramatic price swings, thereby helping to significantly stabilize cryptocurrency markets.
An Important Step Forward
Russia’s potential perspective shift concerning digital currencies impact far more than just the Russian financial system. Once Russia decides to formally integrate cryptocurrencies into their financial system, it will be a major step forward for digital currencies as well. Stronger digital currencies can impact the global economy in numerous ways, including empowering smaller, more fragile economies with weak national currencies to enjoy greater participation in the global market.