Russia’s proposed bitcoin ban will hinder blockchain technology’s development in the Russian Federation, according to Herman Gref, chairman of the board at Sberbank (Russia’s largest bank by assets) and former Economic Development Minister, speaking at the Skolkovo business school Saturday, according to lenta.ru, a Moscow-based news site.
Gref said blockchain is a new web technology comparable to the Internet that has yet to be born. Banning bitcoin will send progress past the Russian Federation’s limits. Blockchain technology experts will have to move to more user-friendly jurisdictions.
Gref admitted to having a small amount of bitcoin at the Finopolis 2015 conference, a forum for financial innovation in the Russian Federation, according to TASS, the Russian news agency.
“I am one of the victims, I have a small amount of bitcoins,” he said at the Finopolis conference, noting that in recent years this cryptocurrency has seriously devalued. “Only one currency in the world has devalued more that the ruble — bitcoin,” he joked.
Ministries Oppose Bitcoin Bill
The Ministry of Justice in Russia has also not agreed to the bill put forth by the Finance Ministry seeking to ban bitcoin and introduce criminal liabilities to those who adopt, transact or mine the cryptocurrency.
The Ministry of Justice has disagreed with the bill despite the bill being the second version of the draft, due to be entered into the State Duma – the lower chamber of the Russian Parliament. The draft bill will still be presented to the State Duma, despite the Ministry of Justice’s opposition.
The Russian Interior Ministry has also weighed in on the matter, calling the cryptocurrencies’ control and supervision under law enforcement’s purview to be a burden and a “distraction.”
Bitcoin Ban Has Supporters
Proponents of the ban on bitcoin nonetheless hold sway within the government.
Alexei Moiseey, deputy finance minister, said in April that the finance ministry will introduce a bill to the State Duma to make exchanging bitcoin for rubles and vice versa a criminal liability. The bill also makes heads of banks criminally liable for up to seven years.
Alexander Bastrykin, chairman of the Russian Investigative Committee, previously sought to introduce a bill to make publication and circulation of money substitutes like bitcoin a criminal liability.
Gref Questions Economy’s Nationalization
In his recent remarks, Gref noted the nationalization of the Russian economy has led to disastrous results. He questioned plans to issue money without expecting such action to bring inflation. “We need to learn from our own history,” he said.
Experts have urged the government to use currency to finance investment projects. At the same time, the experts noted that issuances should be controlled, limited and directed with intended returns. The amount of public funds allocated for investment should be at least 1.5 million rubles annually.
Blockchain Technology Has Promise
The blockchain is used as a repository of information on bitcoin transactions, noted lenta.ru in reporting Gref’s comments. The technology can be deployed in the banking business, greatly reducing the time to conduct large transactions such as stock trading and issuing credit.
Santander InnoVentures, a Spanish investment fund, believes blockchain investors will save nearly $20 billion annually by reducing expenses such as legal and mediation costs for financial operations.
Gref transformed Sberbank from a holdover of the Soviet bureaucracy into a modern financial institution, according to the Financial Times. He is considered one of the leading liberals in President Putin’s leading circle.
Featured image from Shutterstock and the Moscow Times.