Russia may be not ready to take the lead in fintech research. But the country should be open to innovations and adopt the experience of others to remain within the mainstream of global financial development.

Yuri Dranev, a leading researcher at the Foresight Centre of the Institute for Statistical Studies and Economics of Knowledge, Higher School of Economics, admits that today’s Russia can hardly expect a breakthrough in financial technology any time soon. While the USA, UK, Singapore, even India and China are developing programmes and facilities supporting fintech startups, in Russia the regulative climate is far from being user-friendly, told the economist to the Kommersant.ru.

No wonder that even those Russian developers who can offer really innovative ideas prefer to register their projects and seek support for them abroad. Although blockchain as a technology per se meets rather positive response from the officials, the legal position of cryptocurrency in Russia remains shaky. And this cannot but create obstacles for blockchain development on the whole: as of now, cryptocurrency is still the primary sphere of blockchain application.

Nevertheless, Russia can find ways to use blockchain outside the digital currency market, claims Dranev. The technology can increase transaction safety, it can be useful as well for public administration, maintaining registers and voting. In Russia blockchain can become the basis for the national payment system, and thus help to opt out from the SWIFT system, “the disconnection from which is now threatening Russian banks like a sword of Damocles.”

In the meantime, Russian regulators display favourable interest to blockchain. Deputy Minister of Finance Alexei Moiseev said,

“I am sure this technology will be demanded here. Nobody speaks of prohibiting blockchain, nor even thinks of it.”

The head of Russia’s largest bank Herman Gref thinks that blockchain can become the basis for a personal taxation system, where every citizen will be able to track where exactly their money goes.

“The transaction is simply completed when the payment is made, the right of property goes from one to another and this is registered on thousands of computers. And nobody will ever be able to cancel that.”

But the official position regarding bitcoin and other cryptocurrencies remains strict.

“The only thing we want to limit and punish is exchanging cryptocurrency for roubles,” said Moiseev.

The main arguments employed by anti-bitcoinists are always the same: the fight against terrorism and money laundering, as well as securing the ruble as Russia’s national currency. “Surrogate money” (which is the term in Russian legislation referring, among all, to cryptocurrencies) can undermine the monopoly of the ruble due to certain competitive advantages, says Georgy Smirnov, representative of the Investigative Committee of the Russian Federation. And this may lead to unpredictable consequences, so the criminal punishment should be introduced for circulating cryptocurrencies.

On 25 February, the State Duma held a roundtable discussion “Regulating the issuance and circulation of cryptocurrency.” Russian Central Bank and Security and Anti-Corruption representatives voted against legalisation of cryptocurrencies in Russia.

Andrew Levich