The cryptocurrency space in Russia just receive a little bit of hope. A crypto website, bitcoininfo.ru, was handed a victory in an appeals court in Saint Petersburg, which has now ordered the website to be reinstated and its founder, Nikolay Tonkoshkurov, to receive restitution after, as the appeals court said, the site was unlawfully taken down by prosecutors and judges.
In 2016, prosecutors approached the Vyborgsky District Court in Saint Petersburg, asking that the site be blocked. They asserted that the site was a threat because of its cryptocurrency operations, and the courts subsequently agreed, determining that the site had published materials about Bitcoin that violated laws that state that “money surrogates” are illegal and go against Russia’s central bank.
The ruling was appealed, in part, because the site never had a chance to answer to the accusations in court. The appeal was rejected, but the case then made its way to Russia’s Supreme Court. That court ordered the Saint Petersburg City Court to hear the appeal and it then overturned the District Court’s ruling.
The case wasn’t done yet, however, and the ruling was appealed by prosecutors. Now, however, the Oktyabrsky District Court has upheld the City Court’s reversal, ordering the blocking of the site to be released and the owner compensated. He will receive 150 rubles, approximately $2,250.
Over the course of the past several years, a number of websites in Russia that have similar content to that of bitcoininfo.ru have been taken down. The Saint Petersburg court overturned a ban on 40 crypto-related sites this past March, but the bitcoininfo.ru case is the first that went all the way to the Supreme Court. The ruling could potentially set a precedent in the country.
According to the legal team that represented Roskomsvoboda, “From now on, prosecutors will think twice before filing ill-considered and unreasonable lawsuits that cause significant damage to both the Russian internet business and ordinary users.”
Just as there are in the fiat world, the crypto industry has seen a number of scam artists who aren’t willing to comply with the spirit or the letter of the law. There are currently more than 17 sites in Russia that are being investigated for fraudulent activity, but this doesn’t make the entire space bad. If that were the case, money of any form wouldn’t exist.
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Last month, Singapore-based cryptocurrency exchange Huobi announced that it was expanding across the Middle East and Africa. That is just part of a global expansion plan currently being undertaken by the third-largest crypto exchange – based on trading volumes – and is in addition to its goal to set up an office in Russia. That goal has now been reached, but the company says that it has much higher ambitions for the country than just offering an exchange.
Huobi is the first major crypto exchange to have a physical presence in Russia, complete with a Russian-speaking call center. Looking past the trading options, the company wants to also offer lending and space rentals to miners, provide an educational platform for blockchain and crypto innovation and also to help shape the country’s crypto regulations.
While several other exchanges, including Bitfinex, Binance and OKEx, offer a platform for Russian traders, and even have Russian interfaces, not one provides real-time support in Russia. Customers of those platforms who don’t speak Korean, Chinese or English are simply out of luck to finding immediate answers to their questions.
Huobi opened its new office in Moscow, complete with 30 staff members, about a week ago. The office includes the call center, as well as back-office support for over-the-counter listing and trading, as well as personal managers for certain high-end customers. The office manager, Andrew Grachev, told CoinDesk, “If someone wants to start trading with $1,000, he can come to the office and register with the help of a personal manager.”
Huobi Russia is running a campaign that offers commissions below 0.1% in an effort to drum up new business. The rate is applicable to anyone who trades over 50 Bitcoin Core (BTC) within a two-week period this month and is accompanied by a cash back reward that gives traders 20% back on trading fees in the form of Huobi’s own crypto, Huobi tokens.
While Russia is still trying to figure out if it’s in or out of the cryptocurrency ecosystem, the platform won’t be able to accept rubles for deposits. The head of the Center of Digital Transformations for the Vnesheconombank development bank said, “[Huobi officials] consulted with us a lot, and in the end, I think, we made them feel disappointed. They were interested in providing fiat operations, but we told them it’s impossible.”
In the meantime, Huobi will push forward with its other plans. It will offer blockchain training through a special course at Plekhabov University of Economics and will also provide laons to miners so that they can purchase equipment. It will also rent space to miners, with all of the new plans more than likely beginning in the first quarter of next year.
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Blockchain Conference Moscow will take place on November 20 bringing together leading local and foreign industry experts.
Blockchain Conference Moscow will be held for the eighth time. The organizer, international Smile-Expo company, clings to the traditional format: conference plus exhibition of hardware and software.
The conference is intended for developers, entrepreneurs, investors, startup founders, as well as financiers, economists, lawyers, and marketers that work with blockchain and cryptocurrencies. It will fall into two sessions to provide every participant with a possibility to focus on information that interests him or her.
Main topics of Blockchain Conference Moscow:
- Fintech Hall:
- cryptocurrencies and traditional assets;
- blockchain regulation;
- blockchain security;
- blockchain and innovation;
- industrial application of the technology.
- Blockchain Hall:
- tokenization of the economy and other areas of social life;
- decentralization of the Internet;
- ICOs – cryptocurrency crowdsales, present and future;
- successful trading strategies;
- EOS constitution as the first social contract on blockchain.
Every year event organizers invite blockchain experts to Moscow. Presentations are delivered by speakers from Europe, Asia, North America. Reports of the Russian blockchain community representatives are an important part of the program, as these speakers are well versed in the local specifics and share up-to-date case studies. Five experts from Russia have already confirmed their participation in Blockchain Conference Moscow.
Aleksey Studnev, developer, CTO, and founder of Bloxy.info, founder of IT companies located in Russia and the USA. Aleksey will speak about deep analytics in blockchain, its tools, and application areas.
Vladimir Popov, author of the book ICO: essence, problems, law; CEO at Synergis blockchain company. His presentation will focus on reputation systems in the blockchain industry.
Igor Matyukhin, member of the Expert Council of the State Duma Committee on Financial Markets, member of the presidium of the Council for Digital Economics and Innovation Technologies of the Eurasian Economic Cooperation Organization, head of the Committee for Cryptocurrencies and Blockchain of the National Investment Association, adviser at evercity.io.
Maxim Diachenko, managing partner at Petroleum Trading LLC. He will review blockchain from the standpoint of the oil product market.
Gerbert Shopnik, representative of world-known Bitfury blockchain company, will make a presentation on the topic “Blockchain without cryptocurrency: successful case studies and scenarios for business and public sector”.
Software and hardware exhibition
At Blockchain Conference Moscow, Smile-Expo organizes an exhibition area for mining hardware, blockchain-based software and apps, and related goods and services. Over 50 companies annually participate in the exhibition.
A new meeting place! The eighth Blockchain Conference Moscow will take place at the fashionable InterContinental Moscow hotel located at: 22 Tverskaya Street, Moscow, 125009.
From October 25 to November 1 celebrate Halloween with sweet discounts on tickets to the conference – only 9 999 RUB! Registration to the conference is available on the website of the Blockchain Conference Moscow.
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Venezuela already has its Petro stablecoin in circulation and Peru is said to be next with its PeruCoin, which is expected to be launched soon. Now, it looks like Russia might be considering its own state-backed cryptocurrency.
According to Russian media outlet Govorit Moskva, the state Duma’s Committee on Financial Markets announced this past Friday that it is discussing creating a ruble-backed stablecoin in response to an increase in household debt. Duma member and Chairman of the committee Anatoly Aksakov added in a press conference that the stablecoin would be pegged to the country’s currency on a 1-to-1 basis and that an unspecified bank would issue a set amount of tokens based on a deposit made to Russia’s central bank.
Aksakov stated, “I am convinced that a cryptocurrency will appear, but it will be a secured cryptocurrency. At some bank, a certain amount of money is deposited on the deposit, and the bank issues the appropriate amount of crypto tools. The ratio of this currency will be one to one with the ruble.”
A Russian government-issued stablecoin was first discussed earlier this year and was expected to be made available at some point in 2019. An adviser to President Vladimir Putin, Sergey Glazyev, said recently that there had not been any progress on the stablecoin, but added that its implementation would not be difficult since the framework had already been created.
The fact that a state-backed cryptocurrency could be coming to the Russian economy is more than likely a huge factor in what has seemed like a backtrack on the country’s position toward digital currency. At the beginning of September, police started seizing crypto ATMs across the country.
Later that same month, a regulatory framework for crypto had been discussed by the Duma; however, by the time it made it through the legislative channels, any reference to cryptocurrency had been removed. The cryptocurrency community has become increasingly frustrated with the apparent lack of progress for crypto regulations and decided to begin self-regulation last week. The merits of such an organization could become moot if Russia decides to completely take over the cryptocurrency industry.
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Russia’s cryptocurrency sector has given up waiting for legal certainty and taken regulation into its own hands, following the decision of an industry body to establish an arbitration body.
The Russian Union of Industrialists and Entrepreneurs, which lobbies on behalf of cryptocurrency regulation and better infrastructure for the fintech sectors, said it was establishing the arbitration body to handle disputes arising from cryptocurrency transactions, smart contracts and token sales, according to local media reports.
The arbitration body will also have a wider remit, extending to disputes across the ‘digital economy’, pitched as a solution to the broad lack of regulation around these new and emerging industries.
The body has already invited experts and academics from relevant fields to get involved, in a bid to secure the expertise required to effectively adjudicate on crypto disputes.
At the moment, investors in cryptocurrency are unprotected by Russian law, which has now legal mechanisms for enforcing property rights within the digital economy—largely as a result of legal provisions that are far out of date and ill-equipped to handle disputes arising in these cases.
Russian courts are already reported to be struggling with the volume of cryptocurrency disputes, which consistently prove to be challenging and often expensive cases to hear.
It is expected that the ICO boom will eventually filter through into even more litigation, raising fears from within the cryptocurrency sector that the civil court system is running the serious risk of overwhelm.
The new arbitration panel, which aims to provide an alternative mechanism for resolving these disputes, is expected to convene for the first time in early 2019.
As it stands, cryptocurrency transactions and businesses in Russia are subject to somewhat unclear legal treatment, with often contradictory rulings from domestic courts and dictates from the government, officials and industry representatives.
While the arbitration panel will do nothing to address these fundamental issues with current laws, it is hoped that it can at least provide a formal channel for parties to resolve disputes arising from their dealings in cryptocurrencies.
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Lawmakers in Russia are making progress on creating regulations to govern blockchain and digital assets-related activities in the country. According to local reports released on October 21, the Russian parliament is almost done with a draft bill titled, “On Digital Financial Assets.”
The bill is expected to give private businesses and legal entities the ability to store digital financial assets on the blockchain. The bill will also allow the creation and sale of these digital assets, which can then be used as a form of digital equity. The head of the Parliamentary Financial Market Committee, Anatoly Aksakov, announced these latest changes and added in a statement that the country’s parliament has removed the term “mining” from the bill. He further explained that the bill will not cover the taxation of mining profits.
These latest changes come less than a week after Russia’s Parliament announced that the term “cryptocurrencies” was removed from the bill. Currently, the bill does not contain any of the main crypto terms.
In explaining the decision to remove the term “mining”, Aksakov stated that it would not make sense to refer to mining in the revamped bill, given that it no longer mentions cryptocurrencies. Initially, the bill had defined “mining” as the process of creating cryptocurrencies and was also recognized as an economic activity in the country. However, the new changes suggest that Russian officials are no longer thinking about integrating crypto activities into their economy.
According to the announcement, the new bill will not handle taxation matters in regards to profits accrued from cryptocurrency trade. Parliament has left this power to the Federal Tax Service, which will decide whether it will tax such operations.
The Russian Ministry of Finance introduced three bills to Parliament for approval in January, all of which were to be approved on July 1. However, numerous changes were made, resulting in a new draft in March. Some of the changes included the updated version of Know Your Customer regulations.
The bill is supposed to pass through a second reading, which was postponed to this fall. In the meantime, the drafts have been compiled into a single legal framework that is completely different from the original version.
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A Protestant church from the city of Irkutsk in Russia has been court-ordered to pay a fine of 1.1 million rubles ($16,600) after it was discovered to have been consuming large amounts of electricity for its cryptocurrency mining operations.
According to Russian news outlet RT, local utility company Irkutskenergo reported a sudden spike in the electricity consumption of the ‘Grace’ evangelical community in May 2017, reaching 2 million kWh through August. Church trustees told the utility provider that the energy was used for heating as well as to power the printing machine to copy religious materials. Inspectors from Irkutskenergo visited the building rented out to the church, and in it, they discovered a server room on the second floor, which they determined was being used to mine cryptocurrencies.
This resulted in the utility company to charge the church the same rates applicable to corporations and industrial enterprises due to ‘Grace’s’ “excessive power consumption.”
The organization, however, took the matter to court, asking for a refund of the surcharge totalling 1.1 million rubles. However, the Irkutsk Arbitration Court turned down the church’s request and instead, ordered ‘Grace’ to pay up.
In its ruling, the court noted that the energy spike happened during the summer season, and also compared the energy used ‘Grace’ with data from larger temples and printing houses in Russia. Ultimately, the judge ruled that the amount the church paid to the authorities was reasonable.
The eastern parts of Europe have seen significant numbers of home crypto mining in the last few years. This is because the region enjoys preferentially subsidized electricity rates. According to local reports, private residents and other categories of consumers pay 1.22 rubles per kWh ($0.018) during the day and 0.70 rubles ($0.010) at night, so it’s no surprise that enterprising individuals and organizations like ‘Grace’ may have been taking advantage of the cheap electrify to earn extra income.
The recent court ruling, however, could change how authorities in Russia and the surrounding areas will be handle home-based crypto mining activities. Similar to ‘Grace’s’ case, other utility companies could start charging home crypto miners the same electricity rates as those paid by industries and big organizations.
Countries with favorable electricity prices have had to take a stand to control crypto mining activities and electricity consumption. Many have taken action against miners for stealing electricity. Recently, a miner in China was charged with mining cryptocurrency using stolen electricity. The court sentenced him to three years and six months in prison for his actions.
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Russia-based cryptocurrency exchange YoBit has announced a scheduled pumping of coins selected at random.
In its tweet, YoBit gave no specific reasons for its action, wherein “we will buy one random coin for 1 btc every 1-2 mins 10 times (total buy amount – 10 btc).” The exchange, which lists thousands of altcoins, also provided a timer 22 hours prior to the trades. As of this writing, there are six hours left before execution of the scheme.
YoBit Pump in 22 hrs: https://t.co/RIbW7OhKzM
We will buy one random coin for 1 btc every 1-2 mins 10 times (total buy amount – 10 btc).
— Yobit.Net (@YobitExchange) October 10, 2018
We can only wait to see the effect on whatever coins are selected, but the tweet is notable for its unusual nature. Usually, when an asset is bought in the hopes of spurring demand from other investors, it is done more discreetly, so as to sell at a peak.
Last February, the U.S. Commodity Futures Trading Commission (CFTC), which has classified cryptocurrencies as commodities under its jurisdiction, had already warned the public of pump-and-dump scams, saying, “As with many online frauds, this type of scam is not new-it simply deploys an emerging technology to capitalize on public interest in digital assets.” It remains to be seen, however, how regulatory agencies will react, given the forthrightness of the exchange.
Commenters on the YoBit tweet expressed disbelief, amusement, and outrage, as well as cluelessness. Several users on reddit have confirmed the existence of e-mails sent by the company, with address firstname.lastname@example.org, indicating that the exchange had not been hacked.
Already, trading platform Coinigy has tweeted its plan to delist YoBit from its network of cryptocurrency exchanges, “due to overwhelming negative experiences as documented on social media and forums, among other reasons.” However, it said it would be “asking for feedback first. As a popular platform in the crypto trading space, it is essential for us to be diligent and not promote sites that may harm our users.”
YoBit has been operating since 2015.
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Russia has been undergoing a lot of experiments with crypto lately, both physically and theoretically. Most recently, it completed its own initial coin offering (ICO), which was a reportedly a huge success. The amount of time, money and resources allocated to the space makes the latest announcement puzzling. The country has reportedly scrubbed every mention of cryptocurrency and crypto-related terminology from its legal doctrine. This is the exact opposite direction that most within the crypto industry had been anticipating.
This past July, a regulatory framework for crypto was submitted to Russia’s lower house of parliament, or Duma. That framework came from an order by President Putin, who is known for getting what he wants. However, legislators were not able to coordinate their efforts and began to trip over each other, leading to delays.
Lawmakers now say that they hope to have a new framework for “digital financial assets” ready by the fall and hope to receive approval by the end of the year. Until that happens, the word “cryptocurrency” has been removed from the legal lexicon by lawyers, as there is now no clear definition of what it means.
In the meantime, cryptocurrency is going to be nothing more than the issuance of digital tokens in exchange for capital investments – basically, an initial coin offering (ICO). Russian citizens can still buy, sell and trade digital assets and trading platforms continue to multiple across the country.
Crypto can also be exchanged for rubles without fear of the hammer being dropped. Funds can be received directly into trades’ bank accounts, as well as crypto and fiat wallets. A new-ish service, Best Change, offers investors the ability to obtain the best exchange rates for their assets by listing verified online exchanges that can accept the requested transactions.
In an effort to assist with the development of the legal framework, Russia’s Federal Financial Monitoring Service has commissioned a study that will hopefully provide a detailed analysis of all the cryptocurrency transactions that have been conducted. It will store and provide specific details on crypto transactions – mostly Bitcoin Core – and the wallet addresses associated with the transactions. The study is expected to be completed by the end of the year and will not only help shape the legislation landscape, but also provide information that could help control financial fraud.
Cryptocurrency and blockchain technology have been making steady advancements into the mainstream market in many countries around the world, but apparently, this was not the case in Russia. According to local media reports, Russian police have seized no less than 22 automated teller machines (ATMs) selling cryptocurrency in several cities in Russia last week.
Operated by the Bbfpro company, the machines were located in shopping malls, restaurants and stores in nine different Russian cities, Russian news outlet RBC reported, quoting Digital Rights Center lawyer Sarkis Darbinyan.
In a separate interview with Russian media outlets, Bbfpro manager Artem Bedarev claimed there was no notice from the Russian authorities prior to the crackdown, noting that the investigation would continue for at least another six months. The machines would not be returned to Bbfpro while the investigation is ongoing.
The operation was ordered by the Prosecutor’s General Office, acting on a request from the Central Bank of Russia (CBR), a government agent told local media outlets. A CBR officer, who declined to comment on the crypto ATM seizures, noted that the government agency conducts “systematic work to identify and counteract illegal activities in the financial market,” particularly since there is a high chance that uncontrolled cross-border fund transfers and cash outs involving cryptocurrencies can happen.
Darbinyan, however, pointed out that the Russian Federation’s current laws do not prohibit citizens from acquiring cryptocurrencies. Bbfpro, for its part, has been observing all legal procedures, paying its taxes, and verifying the identity of its customers even without prompt from the government.
Bbfpro plans to appeal the seizure operation, according to the lawyer.
On its website, Bbfpro said its machines support purchases of cryptocurrencies like BTC. The company works with crypto exchange Exmo, offering technical support for the ATMs. According to Bbfpro, installing one terminal costs 155,000 rubles ($2,300). It charges 1 percent on the registered turnover, which is considerably less than other crypto ATMs in other countries. For example in Malta, ATM operators charge no less than 8% on each transaction.