Regulation uncertainty with regard to crypto has been a serious issue for a few years in Russia now. The government had received multiple direct orders from President Vladimir Putin himself that the issue needed to be resolved as soon as possible, or they would face some serious crackdowns.
This was supposed to be the ultimate motivator for the deputies sitting in the Duma, but simply knowing that the latest order’s deadline was in July 2019 is enough to understand that nobody is taking the issue seriously. Not even the president since he didn’t deliver on the promise of conducting crackdowns.
Due to so many uncertainties in the law, the crypto industry has been extremely strenuous. Investors don’t necessarily want to risk dedicating too much of their funds to such a risky environment. At any given moment there is a chance that the Russian government will say that crypto will be banned due to lack of resources to govern them effectively, ultimately sending the whole industry into chaos.
Because of this, Russian investors who are already involved in the crypto market, are looking for ways to transfer cryptocurrencies out of the country, or at least cash them out before it’s too late. These attempts have been weighing down on local crypto exchanges as well as mining pools as fewer and fewer people are involved with them.
In fact, this regulatory uncertainty has pushed Russian investors towards things like underground gaming facilities as well as illegal online stores in order to somehow find value in their crypto investments.
A push towards uncharted areas
Thousands of Russian crypto investors have been seen taking part in illegal online gaming as well as playing fantasy football with their crypto investments.
After talking to some of them, who obviously decided to remain anonymous, there are only a couple of reasons as to why they were forced to do so.
- Transactions to these platforms are not documented and delivered to the government
- Nobody forces them to play, they can cash out with real money whenever they want
- The fees are smaller than crypto exchanges
One of such investors had this to say when I asked about his reasons:
“I have no idea what the government will decide about crypto regulation. It could come tomorrow or the moment we finish this interview, it’s just extremely unpredictable. I have a sizeable amount invested in these assets, enough to get me a luxurious apartment in Moscow in fact. Would you like to lose a luxurious apartment overnight? Nobody does right? So I try to cash it out piece by piece so that I’m protected. I go to these gaming websites because I know my identity is protected. Even though I don’t like gambling, I just deposit a small amount, play one game for the minimum amount which is lower than the fees on crypto exchanges, and then cash everything out with fiat money to a different digital wallet. I regularly get transfers from my digital wallet to my bank account, so the bank won’t question if I start increasing my monthly transactions a little bit. It’s definitely going to take time for me to cash everything out, but that’s the only way I can guarantee safety for my investments right now.”
Crypto regulation needs to be a challenge in Russia
Much like everything else the Russian Federation does, implementing a crypto regulation needs to represent a challenge from the West for it to speed up the process.
Considering that most of the European Union member states are slightly grazing the idea on an individual level, it’s definitely not something Russia is worried about.
However, rumours that a Union-wide regulation is coming in the near future could potentially push the government to adopt legislation as soon as possible.
But as long as there is a grey area, Russian crypto ventures are going to remain on a much smaller level than anywhere else in the world.