Russia’s On-again, Off-again Courtship With Cryptocurrencies

Paul Goncharoff

Russia’s on-again, off-again courtship with cryptocurrencies is alive and well. Like most places on the planet the government regulators and the innovative developers are out of sync, and the learning curve just keeps getting steeper. I guess an apt analogy would be Aesop’s fable of the tortoise and the hare.

 The fact remains that Russia is the development home of a great many leading blockchain startups, yet the approvals processes tend to put a time drag on the dynamics of realization. The good news is that eventually the processes do come together and then things start happening fast.

The unequal drag is not being seen nearly as much in the Blockchain of things. It now seems, if rumors are to be believed, that the state-owned gas behemoth Gazprom is introducing blockchain agreements be used for settlement of gas supplies. Alexey Miller who is the head of Gazprom, recently met with the Russian prime minister Dmitry Medvedev to discuss and update the development of innovative applications using distributed ledger technology (DLT).

Gazprom together with Gazprombank (Russian only) have completed developing a prototype model that will allow contracts to be created and monitored automatically using blockchain technology.

In the somewhat different blockchain dependent cryptocurrency world, developments are unfolding as well, and not only for the ‘crypto-ruble’. Not long after Facebook announced plans to release its own digital currency to be used to make transfers across its social media platforms, Russia’s leading social media platform VKontakte otherwise referred to as ‘VK’ is busily working on its own cryptocurrency.

VK is designing the crypto as a means of paying users for content generated on the site and paying for various products and services available on the network. This development follows the launch of the site’s VK Pay (Russian only) payment system in June last year, which allows users to pay for services on VK and its partner sites and getting rewarded for quality content provided or by curating content belong to other users. Today VK has 97 million active monthly users.

The earned coins are eligible for transfer to other users and in turn get goods and services in addition to crypto to fiat conversions made possible by VK Pay.

On the brighter side of speeding things up, the President of Russia Vladimir Putin insisted that the government work proactively to adopt several long-awaited laws by July 1, 2019 to improve and clarify several areas of the digital economy in Russia. From my contacts across Russia, they are champing at the bit to get going once the legal parameters are known.