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Pavel is a convinced Bitcoin speculator. “Whenever I have a bit over, I buy Bitcoins. That’s a nice extra income,” says the 29-year-old Muscovite, who makes his living mainly by building and maintaining websites. He doesn’t see himself as a connoisseur, but so far business has been going quite well, he says with satisfaction.

The Russian leadership, on the other hand, was suspicious of the rise of crypto currencies for a long time. The anonymity and decentralisation of payment transactions have always been suspect in Moscow. The currencies were criticised as a source of financing for extremists and terrorists – in some cases rightly so, incidentally. In addition, exchange rate developments could hardly be predicted.

At the beginning of September, Elvira Nabiullina, head of the central bank, described the steep rise in the Bitcoin price as comparable to the “gold rush” in California in the 19th century. She was concerned that digital money was increasingly being used in payment transactions. “We will not allow the use of Kryptovaluta as a money substitute,” Nabiullina announced. Her deputy Sergei Schwezow recently even wanted to have Internet sites through which such digital currencies are traded blocked.

Now the Russian government has made a 180-degree turnaround: The author is probably President Vladimir Putin himself, who, according to Russian Deputy Prime Minister Igor Shuvalov, was infected with “digital fever” some time ago. In fact, Putin had already met the creator of the world’s second largest crypto currency Ethereum, Vitalik Buterin, at the Petersburg Economic Forum in June.

At a government meeting on the subject last week, the Kremlin leader now demanded to gain sovereignty over the trial. “We have agreed the following: The state takes over the regulation of crypto currency emissions, their mining and the circulation process. The state must take all this under its control,” Finance Minister Anton Siluanov explained the concept.

There are probably several reasons behind this: The increasing popularity of Bitcoin has so far not been affected either by the criticism in the media or by its legally uncertain status. The Kremlin’s panning is in keeping with the Russian motto: “If you can’t prevent mischief, then lead it”, which is attributed to the well-known Russian general Alexander Suvorow. If Russia does not introduce the digital currency itself quickly, the partners within the Eurasian Economic Union would do so, Telecom Minister Nikolai Nikiforov confirmed this thought.

In addition, the anonymity of the crypto currencies also offers Russia advantages, since international sanctions can be circumvented if necessary. The US Foreign Intelligence Agency (CIA) has already expressed suspicion that Russia’s interest could be related to this. The general director of the Russian E-Money system, Qiwi Sergei Solonin, sees the crypto-ruble as at least potentially an opportunity to create a replacement for the international banking transaction system Swift. Russia’s disconnection from the Swift system had already been discussed as a possible sanction.

Thanks to its configuration, however, the crypto-ruble will not be truly anonymous. In addition to the Russian Ministry of Finance, the central bank and the financial supervisory authority Rosfinmonitoring were named as those responsible for the introduction. The crypto ruble is to be exchangeable into real rubles, purchase and sale will be taxed by the Russian government at 13 percent. There are no exact calculations for the costs of the introduction.

There are different reactions from Russian business circles: While some financial experts advise cooperating with already existing blockchain-based payment systems, legalizing their turnover in Russia and thus attracting foreign investors, the “Association for the Development of Business Patriotism” (Avanti) has demanded in a letter to the Duma that only the circulation of its own controllable crypto-ruble be allowed. Otherwise, they argue, the shadow economy, corruption, drug trafficking and terrorism would be promoted.

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