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Russia’s National Finance Association Calls for Legalization of Crypto Investments

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Russia’s National Finance Association Calls for Legalization of Crypto Investments

The main finance industry association of Russia has urged authorities to reconsider a position against crypto investments in the nation’s financial market strategy. The organization insists that the crypto investments of Russians should be brought out of the “gray zone” instead of being banned.

Finance Industry Body Urges Government to Regulate Operations With Crypto Assets

The Russian National Financial Association (NFA) has issued a call to amend the country’s Strategy for Development of the Financial Market of the Russian Federation Until 2030 in the part concerning investments in cryptocurrencies, RIA Novosti and Prime reported, quoting the proposal. The NFA unites over 200 entities active in Russia’s financial market.

The strategy now states that the Russian government and Bank of Russia will continue to oppose the use of “monetary surrogates,” a term often employed to describe decentralized digital currencies such as bitcoin. They carry high risks for citizens, according to the document, and may hinder the implementation of macroeconomic policies aimed at creating favorable economic conditions.

Operations with crypto assets remain “in the gray zone” despite the fact that investments of Russians in cryptocurrencies are significant, the self-regulatory body of the Russian finance sector noted. Foreign companies and unregistered intermediaries receive revenues from such transactions, the organization remarked.

The NFA believes that the option to provide Russian investors with access to digital financial assets through Russian professional market participants, as well as the possibility of creating exchange-traded mutual investment funds with cryptocurrencies for qualified investors, requires additional study.

The proposal comes after recent reports revealed that cryptocurrency is a popular investment choice for many Russians. According to the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (Racib), at least 17.3 million people in Russia have crypto wallets. In December, the head of the Financial Market Committee at the State Duma, Anatoly Aksakov, announced that Russian citizens have invested 5 trillion rubles in crypto (over $67 billion).

Bank of Russia has been a strong opponent of the legalization of cryptocurrencies in the country and wants to restrict crypto investments by blocking card payments to recipients such as digital asset exchanges. However, estimates quoted in the central bank’s own Financial Stability Overview for Q2 and Q3 of 2021 have indicated that the annual volume of digital currency transactions made by Russian residents amounts to around $5 billion.

Do you think Russian authorities will change their stance on cryptocurrency investments? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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El Salvador’s Bitcoin wallet onboards 4M users with Netki partnership

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El Salvador’s Bitcoin wallet onboards 4M users with Netki partnership

Chivo, El Salvador’s official Bitcoin wallet, has managed to onboard 70% of the unbanked population in El Salvador, partner says.

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El Salvador’s Bitcoin wallet onboards 4M users with Netki partnership

El Salvador, the first country to make Bitcoin (BTC) a legal tender, has onboarded 4 million users for its government-backed BTC wallet Chivo in partnership with digital identity provider Netki, according to an announcement.

Netki has announced that Chivo wallet onboarded over 4 million new users in 45 days using the company’s flagship Know Your Customer (KYC)/Anti-Money Laundering (AML) product, OnboardID. The platform also claimed that it had facilitated the compliant onboarding of 70% of the country’s previously unbanked population. 

El Salvador passed the Bitcoin bill in June of last year and officially made Bitcoin a legal tender in September. Nayib Bukele, the president of the small Central American nation, made it clear that the goal was to offer digital banking facilities to more than 70% unbanked population in the country. To promote BTC use and ease of transactions, the government launched a national crypto wallet named Chivo and a $30 airdrop in BTC.

Major financial institutions, including the World Bank and the IMF, shared drastic forecasts while warning El Salvador of unwarranted economic consequences. However, President Bukele continued to promote Bitcoin use in the country and rebuked all the fear-mongering. After the IMF rejected $1 billion financial aid, the El Salvador government launched Bitcoin volcanic bond as Bitcoin proponent Max Keiser advised.

Earlier today, President Bukele also responded to Moody’s recent downgrading of El Salvador’s sovereign debt and said, “BREAKING: EL SALVADOR DGAF”

BREAKING: EL SALVADOR DGAF https://t.co/VuJ25PcvQL

— Nayib Bukele (@nayibbukele) January 17, 2022

Related: El Salvador’s dollar debt dives on Bitcoin bond plans

Chivo has been instrumental in making El Salvador the first country to make using Bitcoin as easy as fiat. Apart from transferring money worldwide, Chivo wallets are being used for daily transactions at restaurants, cafeterias, malls and every other retail market.

The government has also deployed hundreds of Bitcoin ATMs across the country that facilitates millions in cross-border remittance. Chivo has managed to do what banks haven’t been able to do in decades. 

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Bitcoin miners’ resilience to geopolitics — A healthy sign for the network

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Bitcoin miners’ resilience to geopolitics — A healthy sign for the network

Considering that Bitcoin (BTC) is a blockchain network that uses a proof-of-work (PoW) consensus mechanism, miners are a highly significant part of the market dynamics of the network and the community itself. On Jan. 5, it was revealed that Kazakhstan shut down its internet services due to unprecedented political unrest sparked by rising fuel prices in the country.

The protests in Kazakhstan began on Jan. 2 in the town of Zhanaozen to fight against the government doubling the price of liquefied petroleum gas (LPG), which is widely used as car fuel in the country. This change in pricing came as a result of the gradual transition to the use of electronic trading of LPG in order to abolish the existing state subsidies for fuel and allow the market to discover the price of the asset.

However, protests in the region soon snowballed, gaining more momentum and continued despite the country’s government announcing that the prices of LPG would be brought down to a level lower than before the increase. Soon, this led to the country’s presiding cabinet resigning and the state-owned telecom company, Kazakhtelecom, shutting off the country’s internet services. Network data provider Netblocks reported that the normalized network connectivity fell down to 2%, with the government attempting to limit coverage on the escalating anti-government protests.

As a result, the Bitcoin network’s mining hash rate declined over 13% in the hours after the shutdown in the country from 205,000 petahash per second (PH/s) to 177,330 PH/s. Over the past year, the country grew to account for 18% of Bitcoin’s mining activity. A report from the Data Center Industry & Blockchain Association of Kazakhstan estimated that cryptocurrency mining would bring in $1.5 billion in revenue for the country in the next five years.

This is not the first time that Bitcoin mining in the region has received the spotlight. Despite being an energy-rich country, the Kazakh government announced last year that it planned to crack down on unregistered miners that were straining the country’s energy supply after the mining migration from China.

Kazakhstan’s mining market share

The Central Asian country became a hub for Bitcoin mining after the Chinese government banned mining operations and cryptocurrency services in 2021. This led to the migration of mining companies like BIT Mining to relocate their operations from China to Kazakhstan. BIT Mining is one of the largest BTC mining companies in the world. 

The mining company has indicated that it is unlikely to flee Kazakhstan to relocate to North America amid the political upheaval. The firm is closely monitoring and evaluating the situation in order to decide its next move with respect to mining. 

However, countries like Spain have had their eyes on Kazakhstan’s mining market share. The Deputy for the Spanish Ciudadanos political party, María Muñoz, proposed to make the country a mining hotspot amid the current situation, stating in a tweet, “The protests in Kazakhstan have repercussions all around the world but also for Bitcoin. We propose that Spain positions itself as a safe destination for investments in cryptocurrencies to develop a flexible, efficient, and safe sector.”

Rob Chang, the CEO and director of Gryphon Digital Mining, a digital assets mining company, told Cointelegraph:

“Bitcoin mining will continue to grow and the need for viable locations will always be necessary. Countries with the foresight to make themselves Bitcoin-friendly will stand to do quite well as Bitcoin continues to establish itself as a legitimate alternative to fiat.”

As a result of China’s mining ban, the mining dynamics have shifted globally, with the United States leading the charge with over a third of the mining rate. Chang said that one benefit of this migration includes rehomed miners’ shift to a larger mix of carbon-free energy sources.

Additionally, some of the hash rates has gone to more transparent entities operating the mining machines, leading to increased security for the network and a higher level of public trust in Bitcoin miners.

Illia Polosukhin, the co-founder of the NEAR Protocol, a decentralized development platform, told Cointelegraph that in addition to China’s ban leading to a loss of investment, the loss of talent is another major factor:

“Chinese citizens living on the mainland and abroad are banned from working in the crypto sector, and that’s a big loss for the blockchain industry as a whole. It will stifle innovation and, eventually, leave Chinese citizens behind as more users begin to adopt Open Web technologies. It’s possible that more mining operations shifting to the United States could push the issue of blockchain and sustainability more fully into the public eye.”

Thriving amid geopolitical risks is rare for financial assets

The mining hash rate for the Bitcoin network recovered quickly from the drop to 168 million TH/s, according to data from YCharts. In fact, the network has taken a step forward with the hash rate hitting a new all-time high of 215 million TH/s on Jan. 13.

We’re officially building an open bitcoin mining system ✨ https://t.co/PaNc7gXS48

— jack⚡️ (@jack) January 13, 2022

This new all-time high was driven by the statement from ex-Twitter CEO Jack Dorsey, announcing the creation of an open Bitcoin mining system. Thomas Templeton, the general manager of hardware at Square, said, “We want to make mining more distributed and efficient in every way, from buying, to set up, to maintenance, to mining. We’re interested because mining goes far beyond creating new bitcoin. We see it as a long-term need for a future that is fully decentralized and permissionless.”

This new all-time high is evidence of how resilient the Bitcoin network and its community are to ensure that the network thrives at all costs. 

However, it’s important to remember that such risks are not exclusive to Bitcoin. Chang said, “Geopolitical risk is a common issue for many industries, and Bitcoin mining is not immune. While there will be some that will take the risk and operate in these countries for the sake of lower costs, they do run the risk, such as those experienced in Kazakhstan or others such as the government deciding one day to take all of your machines. Operators will need to understand the risk/reward tradeoff.”

Related: A new intro to Bitcoin: The 9-minute read that could change your life

Polosukhin explained that no matter how distributed or decentralized a blockchain network is — Bitcoin or any other — it’s still intertwined with many legacy systems: energy grids, energy prices, regulation and the laws of nations. Bitcoin mining has either been banned or is facing uncertainty in many countries including Iran, Lebanon, Iceland and Sweden.

Being an energy-intensive PoW network, the Bitcoin network is expected to continue to thrive as long as miners are incentivized economically to continue to remain miners. A report from Fidelity Digital Assets, the crypto wing of Fidelity Investments, indicated that the Bitcoin cycle is far from over, and with the high financial incentives for miners, they are in it for the long haul

While Bitcoin is in a price slump, currently trading around the $42,000 range with a market capitalization of $791 billion, the fact that miners — the core aspect of the network — have shown resilience to adverse situations over the 13-year history of the network reinforces the belief and trust the community puts on the flagship blockchain network.

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Solana-based DeFi protocol Hubble raises $10M, prepares for mainnet launch

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Solana-based DeFi protocol Hubble raises $10M, prepares for mainnet launch

Crypto heavyweights including Three Arrows, DCG, Delphi Digital and Crypto.com Capital joined Hubble Protocol’s funding.

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Solana-based DeFi protocol Hubble raises M, prepares for mainnet launch

The Solana (SOL) network is ready to see the mainnet launch for another decentralized finance (DeFi) protocol, aimed at Web3 development and backed by bigshots from the crypto industry.

Hubble Protocol, a project aiming to develop a censorship-resistant crypto-backed stablecoin among other DeFi services, has raised $10 million from Three Arrows / DeFiance Capital, Delphi Digital, Digital Currency Group (DCG), Crypto.com Capital, ParaFi, Jump Capital, Decentral Park Capital, CMS, Spartan, DeFi Alliance and Mechanism Capital.

Hubble plans to expand its team and DeFi products with fresh funds, starting with its scheduled mainnet launch on Jan. 28, according to the announcement. The first item on Hubble’s roadmap is the launch of its zero-interest borrowing platform that mints USDH, a censorship-resistant crypto-backed stablecoin that’s “positioned to become a building block for other protocols” on the Solana ecosystem.

From a decentralized stablecoin to an innovative borrowing marketplace to undercollateralized lending, the Hubble team is building “core DeFi primitives for the Solana ecosystem,” according to DCG director of investments Matthew Beck. He added:

“These are critical components of the Web3 financial stack on one of the most prominent networks in the crypto market.”

Seeing stablecoins as a multi-trillion dollar market opportunity, ParaFi Capital vice president Anjan Vinod stressed that crypto users will want access to both centralized and decentralized stablecoins, where Hubble comes into play. “We see Hubble’s low transaction costs and USDH network effects as compelling features to drive liquidity to the protocol,” he added.

Related: Solana could become the ‘Visa of crypto’: Bank of America

Following its mainnet launch, Hubble users can stake the platform’s native token, HBB, to earn the majority of the protocol’s fees from minting USDH. According to the announcement, Hubble aims to develop undercollateralized lending services in the future and “explore further DeFi innovations laying the foundations for a global and open financial system.”

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