The recent news that the Russian government is planning on legalizing cryptocurrencies is one that has brought with its lots of excitement and speculation both within Russia itself and the entire cryptocurrency industry. Many experts have long suggested that one of the main things holding Bitcoin and other digital currencies back were the legal restrictions that many country’s had put in place prohibiting their use. In this sense, the less Bitcoin regulation there is, the more the currency can continue to grow.
By announcing its Bitcoin legalization plan, the Russian government feels it may be able to take a big step towards eliminating many of the problems currently plaguing its economy. The Russian economy has been hard hit by the drop in oil prices and the sanctions put on it by the United States and the European Union after its annexation of Crimea in 2014. Prior to this, the country had the world’s seventh biggest economy with a GDP of over $2.2 trillion, but the sanctions and low oil prices have seen the total GDP drop by about $1 trillion.
Despite this, there is every chance that the economy will begin to recover as soon as oil prices go back up. Either way, the fact that the entire Russian economy will soon be open to invest in cryptocurrencies means that it is likely the price of Bitcoin, Ethereum and other digital currencies is only going to continue to rise. Even only a small number of Russians invest, each new investor still offers up further opportunities for growth.
Depending on how the Bitcoin legalization ends up taking place—which is by no means certain at the moment—the potential benefits for the cryptocurrency market could possibly be greater than simply attracting a new group of investors. The reason lies in the widespread problem of fraud and corruption endemic in Russian society and also in the blockchain technology used by Bitcoin and others.
Money laundering has long been a huge problem in Russia, ever since the chaos that erupted with the collapse of the Soviet Union. The government has recently taken steps to close more than 100 banks in a massive anti-corruption campaign. Close ties between the Russian business and banking industries have resulted in billions of dollars in money being laundered and hidden all too easily.
There are rumors that the Russian government sees huge potential in blockchain technology as a way to help put an end to these money laundering problems. Instead of tracking the actual coins or tokens themselves, the blockchain platform used by Bitcoin and other digital currencies tracks and keeps records of each transaction. As every user can track transactions live and see the entire history, it enables these digital currencies to in many ways be much more secure and less anonymous. For this reason, some are speculating that the Russian government may actually regulate that Bitcoin’s blockchain platform or some other similar platform become standard throughout the entire banking sector.
If this type of Bitcoin regulation were to happen and prove to be successful, it could usher in a whole new era for digital currencies. Already we are seeing more and more governments opening up to the idea of deregulating and potentially even investing in cryptocurrencies, which seems to point to them playing an increasingly big role in the future of finance.