Russia Cryptocurrency Use Jumps During Coronavirus

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  • Russian cryptocurrency use has spiked in the last three months
  • Bitcoin futures are particularly popular
  • New regulations may hamper additional uptake

Russian cryptocurrency use has surged during coronavirus, potentially in advance of tougher new regulations due to come into effect within weeks. Russian news site RBC-Crypto revealed that cryptocurrency exchanges like Binance Russia, Garantex, and EXMO have seen a significant increase in user registrations and activity during the past three months, with futures trading seeing a particularly high uptake. With new regulations on the horizon that aim to restrict holding cryptocurrency anonymously however, there is a worry that the boom may come to a swift halt as exchanges consider leaving the country.

Russian Cryptocurrency Exchanges See Increased Registrations and Usage

Russia has had a mixed relationship with cryptocurrencies, with much trading conducted in secret due to uncertainty around the official view. Russia has never formally outlawed crypto trading, but authoritarian regimes and decentralized financial systems don’t naturally make good bedfellows.

Unlike countries such as China however, Russian cryptocurrency laws haven’t gone as far as stamping out exchanges, and the exchanges that do operate in the country have reported a rush to cryptocurrencies between March and May this year.

Alongside a general growing appetite for risk, especially among those isolated due to coronavirus, is an increased usage of Bitcoin futures instruments, which have seen up to a fivefold increase since January on some exchanges.

New Regulations Could Scupper Growth

The growth experienced by exchanges in recent months may soon be coming to a halt however, following the approval of tough new regulations which will be implemented soon. These regulations, which will form the basis for a Russian cryptocurrency framework, were released for public opinion last week under the title On Digital Financial Assets and significantly change the way cryptocurrency is regulated in Russia, but stops short of an outright ban.

Like in the Ukraine, Russian cryptocurrency holders will have to declare their holdings on their annual tax returns, with the incentive that they will be offered the same legal protections as holding property. Those who do not declare their holdings will have no such protections.

Russian crypto exchanges have already decried the impact of the new regulations on exchanges, leading to some CEOs claiming that all Russian cryptocurrency exchanges will now either close down or leave the country to operate, potentially losing millions of dollars of revenue for the Russian authorities.