Focus group№ 3 December 2017

Nikita Maslennikov,

Head of the Finance and Economics Department at the Institute of Contemporary Development:

Due to its high volatility, the cryptocurrency market resembles a dotcom bubble that is about to burst. However, I believe that in this case, the crypto-market would not collapse but clear itself from non-viable players.

Nevertheless, the market regulation is needed anyway. Various countries have taken different approaches. In the USA cryptocurrencies are treated as goods, and the transactions with them are taxed accordingly. Japan recognises bitcoins as a means of payment, while Switzerland treats them as a foreign currency, and China prohibits any crypto-operations. In general, cryptocurrencies are considered mainly as a new type of financial instrument. This interpretation seems to be the most promising, in my view, as the existing regulatory measures can be applied.

The process of crypto-market formation is likely to be accompanied by the development of digital national currencies as equivalents to fiat money (that is, legal means of payment, the nominal value of which is determined and guaranteed by the government), necessary for accounting purposes. Thus, crypto-rouble as a digital version of the national currency will be fully controlled by the Central Bank. In this case, the Central Bank will have to provide liquidity not only to credit institutions, but to all active participants in the financial system as the current use of cryptocurrencies excludes any mediators and allows operations to be conducted directly.

Alexander Abramov,

Professor of the Department of Finance, Higher School of Economics:

I am a supporter of the cryptocurrency market regulation. If at first this phenomenon was more like an initiative for a narrow circle of specialists, now it is becoming truly global. Ultimately, this leads to some users unable to comprehend all the risks of cryptocurrency usage, and who need protection. But on the other hand, excessive governmental intervention could damage cryptocurrency’s appeal.

The emergence of cryptocurrencies had many prerequisites. But despite their relevance, they have not yet found wide application in the financial sector and their positioning as an alternative to real money is premature, in my view. This is mainly because blockchain currencies have not yet been built into the taxation system and are characterised by high volatility.

I believe it would be better to use cryptocurrency as a financial asset that has its own regulated market. Furthermore, cryptocurrencies could be used to develop commodity markets, for example, within the Eurasian Economic Union (EEA) countries. This could achieve liberalisation of trade in the EEA that would benefit the economies of the member.

Pavel Novikov,

Director of the FinTech & Blockchain Development Centre of the Skolkovo Foundation:

With over $250 billion in capitalisation, we are seeing a galloping capitalisation growth of cryptocurrencies. But if we compare this market to any other major global economic phenomenon, it turns out that its scale is not yet as big as it seems. There is still some time to prepare for changes.

Of course, any technology can be used for both good and evil. In this respect, cryptocurrencies are no different from ordinary money, and as such they require regulation. In bitcoin’s case, regulations can be easily implemented, since any corresponding controlling authority can easily track the streams of tokens, marking them at their discretion. In a way, it could work as an X-ray of cashflow, scanning all financial transactions and hence reducing corruption.

It is likely that in Russia, bitcoin and other cryptocurrencies will not be used as a means of payment. Instead they could become a means of exchange, savings and investments. In 2018, Russia is planning to develop new taxation regulation and new terminology for the cryptoeconomy, including ‘cryptocurrency’, ‘tokens’, ‘smart contracts’, ‘ICO’ and ‘mining’.

Denis Smirnov,

Blockchain Consultant, Lisk Project (Russia):

I think in the future, cryptocurrencies in Russia will gain status of financial assets, which could be traded on specialised exchanges. At the same time, they would either be affiliated with the government, or have licences that allow to monitor transactions (at least when they are cashed). For this purpose, in the nearest future, a crypto-rouble should be developed in Russia, the rate of which would be tied to the value of the national currency.

In terms of the forecasts, in the worst case scenario, we can expect either a complete ban on cryptocurrencies or a lack of regulation in this area with the possibility of trading cryptocurrencies only on affiliated sites with mandatory registration.

In the best case scenario, we can consider the wide use of cryptocurrencies as a financial instrument, in which governments would assume not only the role of regulators, but also the duties of arbitrators in operations which would involve cryptocurrencies (for example, providing legal protection for organisations dealing with ICOs).

Elina Sidorenko,

Head of the Interdepartmental Working Group of the Russian State Duma on risk assessment of cryptocurrencies, and a Professor at MGIMO:

According to the Centre for Digital Economics of Financial Innovation at MGIMO, the greatest turbulence in the ICO market is expected in early 2018 followed by stabilisation of the situation. Then, during market stagnation, new players are expected to enter, among them large corporations with significant financial power. It is at this point that we can expect the formation of a fully-fledged cryptoeconomy with sufficient capitalisation. However, this will only become a reality if there is a regulatory framework that guarantees protection against unwanted risks.

When developing the framework, we must rely on our own capacity. Not a single country in the world has yet built a significant legislative regulation in this area. The exception is Japan, which used cryptocurrency to weaken its excessively strong yen, but this example is of a different matter. To develop the necessary legislation and a legal status of cryptocurrencies should be governments’ core priority in this area. China has become an example when the lack of a regulatory framework, multiplied by the rapid growth of bitcoin’s popularity led to fraudulent schemes, prompting the country’s leadership to subsequently introduce restraining measures.

Recently the Minister of Communications Nikolai Nikiforov announced that Russia plans to develop its own national cryptocurrency. I think this would make sense, only if the crypto-rouble is viewed as some sort of transactionfacilitating service, a link between the real money and cryptocurrency that cannot be speculated.

Konstantin Korishchenko,

Head of the Department of Stock Markets and Financial Engineering, Faculty of Finance and Banking, Russian Presidential Academy of National Economy and Public Administration:

The main advantage of any cryptocurrency is that it can be used to implement a fundamentally new approach to monetary circulation. Today’s market operates mainly on debt. But after switching to cryptocurrency, the economic model could become similar to that used before the abolition of the gold standard. This is because the issuance of a cryptocurrency could only occur upon completion of an actual process – «mining». As the current monetary system has been in crisis since 2008, the use of cryptocurrency could be one of the most effective measures to improve the situation.

As for the risks associated with the use of cryptocurrencies (money laundering, tax evasion, etc.), the same concerns may apply to cash, precious metals and other commodities. To reduce the risks of illegal use of cryptocurrencies, first of all, we would need to solve the problem of collecting minimum required information about bitcoin account holders.

The cryptocurrencies regulation should be treated very carefully and in a balanced way. Looking at the example of China, users may simply move on using the same services but in a different country. It is probably worth taking into account the Japanese experience, where cryptocurrencies have been recognised as an electronic means of payment, all private individuals and organisations that carry out crypto-transactions must register and meet certain requirements (in particular, related to capital).


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