Russia’s Largest State-Owned Bank Introduces Country’s First Crypto and Blockchain ETF

Sberbank, the largest and state-owned Russian bank, has introduced the country’s first exchange-traded fund (ETF) to offer exposure to companies involved in the blockchain industry.

The fund launched by the bank is called Sberbank Blockchain Economy ETF that trades on the Russian stock market under the ticker “SBBE,” Sber Asset Management said in a statement.

The new ETF aims to track the Sber Blockchain Economy Index and provide its investors’ exposure to crypto trading firms, including publicly listed crypto exchange Coinbase (COIN), crypto asset management firm Galaxy Digital, and Digindex, a blockchain software provider.

Besides these firms, the index also covers crypto and mining companies and firms providing consulting services in the industry.

“There are hardly any people left who have never heard of blockchain,” said Evgeny Zaitsev, General Director of Sberbank Asset Management, noting that direct investments in crypto-assets are associated with high risks; as such, they propose to invest in companies that are involved in the development of blockchain technologies than in crypto assets.

The ETF will give its investors exposure to the “blockchain economy without the difficulties associated with the direct development, purchase, storage, and sale of digital assets,” the company said in a press release.

Meanwhile, Russia’s central bank has been vocal about its stance against crypto, with Governor Elvira Nabiullina saying recently that they don’t want people to invest in crypto. Another official called this a “financial pyramid,” saying in no unclear terms that they have a “negative attitude” towards crypto assets.

The central bank also said that it is looking to ban crypto investments in the country, citing their usage in money laundering and terrorism financing. However, more than $5 billion transactions have been conducted in the country annually, said the Central Bank of Russia in its November report.

Like other countries, Russia is also working on a ruble-backed central bank digital currency (CBDC).

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Author: AnTy

“We Have A Negative Attitude Towards Cryptocurrencies,” says Russia Central Bank Official

“We Have A Negative Attitude Towards Cryptocurrencies,” says Russian Central Bank Official

While Russian President Vladimir Putin supports crypto as a means of payment, the country’s central bank remains skeptical about them.

“We are advocating for Russia’s financial infrastructure not to be used for investments into cryptocurrencies, and this is possible to implement,” Governor Elvira Nabiullina told a briefing on Friday.

The Russian Central Bank sees risks to financial stability with the rising number of crypto transactions and as such advocated a “complete rejection” of them, reported Reuters, citing sources.

On Wednesday, US Federal Reserve Chairman Jerome Powell said that he does not see crypto as a financial-stability concern “at the moment” but did call them “really speculative assets.”

This week, Bank of England (BoE) Governor Andrew Bailey also warned about the rapid growth of crypto, saying that while “it probably isn’t a financial stability risk today,” crypto has “all the makings of something that could become one.”

Russia’s central bank is now ratcheting up its campaign against private crypto with Valeriy Lyakh, head of its department for countering market misconduct, saying investment in crypto was a “financial pyramid.”

“We have a negative attitude towards cryptocurrencies. We definitely do not support any circulation of it in our country,” Lyakh said in the video.

The Bank of Russia, meanwhile, is planning to issue its own digital rouble and join other central banks to modernize financial systems. The pilot for the CBDC program, which was initially planned to launch in December, was recently postponed to early 2022.

The central bank of India is also discussing crypto with Governor Shaktikanta Das, reiterating his views against allowing crypto, saying they are threats to the financial system.

The Reserve Bank of India said in a statement that the latest meeting of the Central Board of Directors of RBI was held under the Chairmanship of Das, where they “discussed various aspects relating to Central Bank Digital Currency and Private Crypto Currencies.”

The Indian government, meanwhile, has proposed to bring legislation on crypto. The Cryptocurrency and Regulation of Official Digital Currency Bill was listed for consideration in the ongoing Winter Session of Parliament but sources say that it may not be taken up during this session which is scheduled to end next week.

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Author: AnTy

Private Messaging App Telegram Ready to Go Public In Next Two Years, Valuation Between $30-$50B

Instant messaging app Telegram is reportedly planning to go public.

According to Vedomosti, a Russian business newspaper that cited multiple sources familiar with the matter, Telegram plans to launch an Initial Public Offering (IPO) within the next two years with a possible valuation in the region of $30 to 50 billion.

The details of the intended IPO are yet to be made public or finalized, according to Vedomosti. Amongst the possible scenarios for Telegram’s listing are market dynamics, a traditional IPO model, direct listing, or a merger with a special purpose acquisition company (SPAC).

While details of the IPO are yet to be made known, Telegram is reportedly conducting pre-IPO analysis and is looking to decide on the most appropriate region for going public.

Telegram’s Historic User Growth

Telegram has had an exponential year after an additional 25 million new users were onboarded on its platform within three days. According to a report, these new users were spread out across all parts of the world, with 38% from Asia, the largest of the entire figure. Pavel Durov, CEO of Telegram, stated,

“We’ve had surges of downloads before, throughout our 7-year history of protecting user privacy. But this time is different.”

Durov did not fail to acknowledge that the influx of new users was due to the changing of WhatsApp’s privacy policy, its rival app.

At the time, WhatsApp threatened users that they were now required to share their data with Facebook or stop using the service. This prompted concerns from users, such that they opted for Telegram instead.

Why Telegram May Snub US For China

Although Vedomosti’s sources said a preferable choice for Telegram’s shareholders would be a direct listing on either Nasdaq or Hong Kong Stock Exchange, the latter is more likely the destination due to the platform’s Asia-centric user base.

At the moment, 40% of Telegram’s users are based in Asia. Due to a projection that the number would reach 50% in two years, and with the total number of users expected to have grown to 1 billion, Hong Kong may be the messaging app’s destination.

Another reason why the US may not be a preferred place for the company to be listed is its long-running confrontation with the country’s Securities and Exchange Commission (SEC). The company had to abandon its Telegram Open Network (TON), an ambitious project that raised $1.7 billion from investors in a private Initial Coin Offering (ICO), which the SEC labeled illegal and subsequently folded up.

With TON, Telegram aimed to integrate a decentralized economy, thereby enabling its users to move money around outside of governments’ purview. But the project was dead on arrival as the SEC forced Telegram to shut it down.

The post Private Messaging App Telegram Ready to Go Public In Next Two Years, Valuation Between -B first appeared on BitcoinExchangeGuide.

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Author: Jimmy Aki

Russian Monitoring Agency Develops Blockchain Analysis Tool To Track Bitcoin And Monero

A report from local news channel RBC confirmed on Tuesday Russian intelligence unit, Rosfinmonitoring, (Russia’s Federal Financial Monitoring Service), has proposed a cryptocurrency monitoring tool similar to U.S.’s Chainalysis. The agency, in charge of reducing cases of money laundering and terrorist financing in the country, will start tracking Bitcoin and other cryptocurrencies including privacy enhanced tokens such as DASH and XMR.

“The Transparent Blockchain”, is a new prototype built in partnership with the Lebedev Physical Institute of the Russian Academy of Sciences that will use artificial intelligence to track blockchain activity and cryptocurrency transactions. According to the report, a letter to the Deputy Minister of Digital Development, Communications and Mass Media, Maxim Parshin, has been approved by the Ministry of Telecom and Mass Communication.

So far, the Rosfinmonitoring has started preparations for widespread production of the software with the Bank of Russia and financial institutions within the country set to test it in the “near future.”

A $10 million request

The prototype is ready and tested on drug controls, the Federal Financial Monitoring Service confirmed. However, till now development of the blockchain analysis service has been constricted to extrabudgetary funds. To continue the build, the Rosfinmonitoring requested the federal government to increase their funding for the project by 760 million rubles (~$10.42 million) in the next three years.

Russia has been on the forefront in preventing money laundering and terrorist financing using cryptocurrencies. In July, President Vladimir Putin signed two digital asset bills into law – first, authorizing that crypto is property and second, digital assets cannot be used as a form of payment within the country. Earlier this month, the Russian government outlawed sending cryptocurrencies to any anonymous wallets forcing users to be fully KYC compliant.

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Author: Lujan Odera

New Law Bans Anonymous Wallet Deposits To Curb Illicit Activities in Russia; Must KYC

The Russian government has passed a ruling to ban anonymous deposits into online wallets to curb illicit use of these anonymous funds. The banning would supposedly affect almost 10 million people who use different online wallet services such as Yandex, WebMoney, PayPal, and Kiwi.

People use these online payment and wallet services anonymously, where they top-up their wallet with a certain amount and then proceed to use it for different purposes, including buying of cryptocurrencies.

The government hopes to curb financing of terrorism and the illegal drug trade, which has been a growing concern given almost 10 million people make use of these online payment portals to make anonymous deposits to these online wallets.

The Russian government has been cautious about legalizing crypto use in the country since they believe legalizing crypto as a legal tender can undermine their sovereignty on issuing cash. However, Antonina Levashenko, an economist by profession, believes the measures taken against anonymous crypto wallet deposits won’t affect the blockchain space and the progress made in the decentralized ecosystem. Levashenko explained,

“Will it affect cryptocurrencies? Currently, these changes have been implemented only about electronic money by the amendments to the law on the national payment system. But shortly, undoubtedly, yes. FATF standards are always applied to new technologies by analogy: if at first the standards were spelled out for classic bank accounts, then they were first extended to electronic wallets and prepaid cards, and then to virtual wallets for cryptocurrencies, ”

Experts Believe the Impact of Ban Would be Minimal

Maria Stankevich, an EXMO crypto exchange business development manager, believes the current ruling by the government would only impact those exchanges which haven’t been following the compliance set by the regulatory authorities. She also noted that the current ban would force bad actors to either shut their operations or make changes to incorporate the compliance guidelines set by the authorities. Stankevich explained,

“A small insider: one large payment system … at one time refused us after a long passage of all compliance procedures. Colleagues explained this by the fact that despite the strong anti-money laundering and anti-fraud procedures, our exchange can replenish an account through the named payment systems, which, in turn, can be replenished with cash. This means that no one can trace the origin of these funds, which contradicts all the policies of this payment giant. We were distraught then but hoped that someday such a law would be adopted.”

Just last week, President Putin has signed a law for Law on Digital Financial Assets, which prohibits the use of bitcoin and other cryptocurrencies as a means of payment. The rules and guidelines related to the new Law on Digital Financial Assets would come into practice by January 1st, 2021.

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Author: James W

Russia Legalizes Cryptocurrencies for Savings and Speculation But Bans Use as Payment

Russian lawmakers passed a bill on Wednesday that gives cryptocurrencies legal status but, at the same time, banned them from being used as a means of payment.

Duma, the lower house of parliament, approved the bill on digital financial assets in the third and final reading. Anatoly Aksakov, who heads the Russian Banking Association and a financial committee in the Duma, as to what a cryptocurrency is now defined in law, said,

“Essentially the cryptocurrency is a complex of digital data, a digital code or a reference, that is stored in the information system.”

The bill has to go now to the upper house of parliament and then to the Kremlin, which is just a formality. The bill will come into force in January 2021.

“Possession of digital currency, its acquisition and transfer by legal means are allowed only if declared,” said the central bank on the new bill. “The draft law introduces the definition of a digital currency, which cannot be a means of payment,” it said.

Russia changed its stance on cryptos in 2018 and promised to regulate the market. However, the regulation had been delayed ever since. At one point, the lawmakers drafted a version of a bill that made trading in cryptos and issuing them illegal.

With the latest draft, cryptos are now kind of like property that one can buy, sell, and invest in but can’t be accepted as a means of payment.

The bill says the issuance of crypto in the country should be regulated by other laws that Aksakov says could be passed during the next parliamentary session in the fall, which ends in late December.

The DFA bill provides the foundation for the crypto legislation in Russia, and the actual regulatory framework for crypto will be defined in the “On Digital Currency” bill.

Many say the current bill doesn’t change anything for the crypto industry in the country, and the DA, which is still in discussion, might “come as a surprise.”

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Author: AnTy

Russian Court Denies Appeal for $900K Compensation for Stolen Bitcoin; It’s Not Property

A victim of a kidnapping in Russia who lost $90,000 worth of Russian Rubles and 99.7 in stolen Bitcoin, appealed to the court almost two years ago, to force the kidnappers to return his stolen bitcoin worth about $900,000 when the crime was committed.

However, the judge ruled against the victim, citing Bitcoin is not a legal tender in the country and is not deemed as property and thus cannot be returned.

The judge ruled the kidnappers must return a portion of the stolen Russian Rubel and sentenced them to 7-10 years of prison. The court order denying the victim possession of his stolen bitcoin could still be challenged in a higher court.

Russian government and regulators have maintained a passive stance on crypto despite them trying to regulate it under current property laws. Despite the court orderings and several deadlines, the status of cryptocurrencies in Russia is still uncertain.

The latest draft bill titled “On Digital Financial Assets,” recommends stricter measures to curb the use of digital currencies. However, if the bill is approved, it would categorize Bitcoin as a property that the victim can use to claim his stolen bitcoins back.

While the country hasn’t taken any concrete steps to legalize the trading or use of crypto, Russia saw a massive boom in usage during the COVID-19 outbreak.

The lockdown imposed by almost all severely hit countries for a couple of months saw a complete restriction on accessing public services, including banks. This forced the public to look for alternatives.

Russia Not Keen on Having an Alternate Financial System

Most of the countries believe legalizing bitcoin would put their financial sovereignty at risk as people would start jumping ships to a newer form of currency. This is the reason many countries are reluctant to regulate bitcoin or cryptocurrencies, including Russia. Even those countries which have regulated it has made it legal only for trading and not to use as a tender.

The Russian Central Bank holds a similar view and believes bitcoin cannot be granted a legal tender status, however, many other Russian government agencies believe banning is not an option as it would create a black market outside the jurisdictions of the government and it could also impact the flourishing blockchain industry in the country.

The Ministry of Economic Development believes a ban on cryptocurrencies could force a nascent sector out of the country, which would then cause an adverse effect on its economy in the long term.

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Author: Rebecca Asseh

Russia to Leverage Bitfury’s Enterprise Blockchain Solution, Exonum, for Impending Referendum

  • Russian referendum elections to include Blockchain pilots in Russia’s capital and Nizhny Novgorod.
  • They will be supported by Bitfury’s enterprise Blockchain solution, Exonum.

News has emerged of Russia’s intent to leverage Blockchain tech for its upcoming referendum. They are to vote on whether the presidential term should be increased, allowing the president to serve for more than two, six-year terms. Initially, the referendum was originally set for April 22nd, however, it was pushed back to July 1st due to Coronavirus concerns.

Russia Launches Pilot Programs

They have established that Moscow and the Nizhny Novgorod regions as where the Blockchain pilot programs will be utilized. The dwellers of the two areas will be afforded the alternative of balloting electronically, unlike other areas that will have to make do with the legacy paper polling.

The Moscow’s Department of Information Technologies has highlighted on their official page that they will be designing the electronic election system. There is, however, mention of Kaspersky labs as the developer of the system.

This will be supported by Bitfury’s Enterprise Blockchain solution, Exonum. Operating on Proof of Authority concept, the smart contract for the ballot registry will be tasked with vote tallying and storage. Once voting is complete, tallied votes be deciphered, and results published.

Bitfury, through their spokesperson, was not keen to clarify their role in the project. They, however, highlighted that Blockchain-based voting was one of the main scopes of their enterprise Blockchain. Exonum was launched way back in 2017 as an open-source Blockchain solution. They, however, rolled out Exonum enterprise on December 5th last year. This new solution was tailor-made to suit the needs of corporations and governments due to its scalable nature, a feature not present on their open-source model. Just a few of the partnerships include; South Korean Hospitals, and Longenesis Blockchain Medical Data Marketplace.

Russia’s Love on Blockchain Voting

Notably, this not Russia’s first attempt at Blockchain polling.

On September 8th, 2019, residents of three districts in the Russian capital were extended the option of balloting electronically supported by Blockchain voting solution. They reported a 92.3% turnout translating to almost 10 396 Muscovites.

However, upon further inspection of the system by Pierrick Gaudry, a French cryptographist determined that the system was indeed vulnerable to hacking attacks. According to him, although the system was built on an almost impenetrable Ethereum Blockchain, the encryption system adopted by the creators of the program was flawed.

Experts Remain Skeptical on E-voting

Industry experts remain skeptical of the feasibility of electronic voting let alone a Blockchain-based solution. Blockchain researcher, Sergey Tikhomirov citing the Moscow elections was opined that with no technical method of viewing the data, the system was vulnerable to tampering by the administrators.

“Unlike with the paper ballots, in this case, the forgery leaves no trace,” Sergey Tikhmirov.

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Author: Lujan Odera

Crypto Exchange Binance Looks To Join Houbi, OKEx In Launching A Mining Pool

Top crypto exchange Binance has plans to launch its own mining pool, according to a Russian crypto news outlet Coinlife on Tuesday.

The news was confirmed in the meantime by 3 different sources that are active within the mining business, on Wednesday, Changpeng Zhao, the CEO of Binance, tweeted about the pool. Here’s what Coinlife said on the matter:

“The company has already hired some professionals for this purpose, some of them former Bitmain employees. The launch is planned for the Q2 2020.”

Head of Sigmapool Also Talked About the Launch

Jakhon Khabilov, the head of the mining pool Sigmapool, has also talked about the launch, saying that Binance is already offering its potential customers very generous bonuses for making referrals. He added that the exchange has also been reaching to some Chinese miners to promote its soon-to-be-launched service.

Binance Follows Huobi and OKex

Binance is not the only one to launch its own mining pool, as Huobi and OKex have done this last year, with OKex in August and Huobi in September. At the moment, their pools are amongst the top 10 producing blocks in the Bitcoin (BTC) blockchain.

CoinDance BTC Mining Pools
Source: Coin.Dance

Poolin’s, currently the 2nd largest share of Bitcoin Hash Rate, Vice President Alejandro de la Torre, says exchanges are motivated by liquidity to join the BTC mining farms. It’s a well-known fact that mining adds liquidity to exchanges in a very cheap manner.

Bitriver’s CEO Things Crypto Exchanges Should All Launch Mining Pools

Bitriver’s, one of the biggest Russian mining farms, CEO Igor Runets thinks that launching mining pools is the most logical thing to do for crypto exchanges, seeing both mining pooling and crypto exchanging are software-based businesses that don’t require any additional professional skills. Mining pool users happen to also be exchange’ users, so the client base largely overlaps, he added.

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Author: Oana Ularu

Russian Economic Ministry To Create Crypto And Blockchain Regulatory Sandboxes In New Bill

The Russian Federal Ministry of Economic Development has proposed new legislation that seeks to legalize crypto as well as blockchain-based initiatives through a special regulatory framework.

The Ministry of Economic Development has already crafted and introduced a draft legislation to the State Duma, Russian Parliament, in a bid to enable the testing of blockchain and crypto initiatives in a specified regulatory sandbox.

The draft law will apply to digital technologies that will be incorporated into eight sectors ranging from financial markets, government services, trade, healthcare, distance learning, transport, manufacturing to construction.

The proposed legislation will be vital in unlocking experimental testing for projects such as unmanned automobiles, use of data without prior consent as well as diagnostics.

As per the local reports, partakers of the regulatory sandbox from the blockchain and crypto sector will enjoy regulatory relief in different fronts such as the minimum capital size, reporting as well as reserve funds. Those using the sandbox will also be exempted from the nation’s foreign exchange law.

According to the Economic Ministry, Russia’s central bank, Bank of Russia, will be solo financial market regulator in the regulatory sandbox. However, it is still not clear if the bank is supportive of the ministry’s initiative.

The latest news comes just hours after a top Bank of Russia official stated that the nation’s virtual assets law is set to ban the issuance as well as circulation of cryptocurrency. As per the official, the Digital Financial Assets bill is set to ban almost all crypto-based aspects apart from holding. The bill has been delayed various times after it was introduced to parliament back in January 2018. Not even an order from President Putin could see the bill sail through.

[Also Read: Russian Govt Looks To Block Censorship-Resistant Tech; IoT, TOR, and Telegram’s TON]

Push For Digital Payments

Meanwhile, Russia’s central bank is urging the citizens as well as merchants to utilize digital payments and cut on the use of cash, Reuters reports. The bank is pushing for the adoption of digital payments in efforts to stem the spread of coronavirus through banknotes.

The central bank is also urging banks to encourage their customers to use cashless means.

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Author: Joseph Kibe