Why Russia Changed Its Mind About Cryptocurrencies

Russia’s President Vladimir Putin addresses the Federation Council in Moscow’s Kremlin on Tuesday, March 18, 2014. President Vladimir Putin defended Russia’s move to annex Crimea, saying that the rights of ethnic Russians have been abused by the Ukrainian government. He pointed at the example of Kosovo’s independence bid supported by the West, and said that Crimea’s secession from Ukraine repeated Ukraine’s own secession from the Soviet Union in 1991. (AP Photo/Sergei Ilnitsky, pool)

A little over a year ago Russia’s Finance Ministry was preparing lesgislation to jail users of Bitcoin for seven years. Now the Russian government has signalled broad support for online currencies. What changed? Marc C. Johnson had some theories:

  • With international sanctions – spurred by Russia’s actions in Ukraine – making global finance increasingly difficult for the Russians, anonymous untraceable online peer to peer currency systems suddenly seem like an attractive way to avoid global regulators.
  • Silicon Valley has seen a rush of capital from those investing in cryptocurrency based technologies, and the Kremlin may want some of that cash to flow to the East.
  • Moscow had early dreams to create its own cryptocurrency, and to force adoption by banning others. However officials may have realized the inherent contradictions in the government trying to build a decentralized currency.

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