Most cryptocurrency enthusiasts are well aware that the Bitcoin situation in Russia is very complicated at best. That is anything but surprising, given the wide spectrum of actions and opinions on cryptocurrency in the country right now. In the latest effort, Russia’s central bank effectively prevented one of the country’s main clearinghouses from settling OTC contracts based on cryptocurrencies. That’s not a good sign by any means.
Another Poor Decision by the Russian Central Bank?
The number of people currently opposing Bitcoin is almost as great as the number of proponents. Right now, this situation could easily move in either direction, although there are no guarantees whatsoever. The Central Bank of the Russian Federation continues to oppose cryptocurrency growth at every possible turn, and it is highly doubtful it will stop doing so anytime soon. Bitcoin threatens its business model in every possible way, which means it will do everything it can to prevent the ecosystem from growing too big.
To that end, the central bank has sent a letter to one of the biggest national clearinghouses, MFB Clearing Center, in which it advises the company not to process OTC cryptocurrency settlements. It’s a very unusual change of events, although it is not entirely illogical either. The clearinghouse in question has been involved with multiple initial coin offerings to date. This does seem to indicate that Russia has not taken kindly to ICOs specifically, not that the country is trying to hinder cryptocurrency itself right now.
The Russian central bank leaves very little to the imagination with its letter. According to the directive, MFB Clearing Center should have no further dealings with cryptocurrencies, although it can choose to ignore this warning if it prefers. Doing so would not necessarily be a smart decision by any means, though. The company is best known for its clearing services related to securities and commodity exchange markets across Russia. The company’s involvement in initial coin offerings may come to haunt it in the long term.
One thing to keep in mind is that MFB Clearing Center is a major player in the Saint Petersburg Stock Exchange, Russia’s third-largest stock exchange ranked by trading volume. It is also the only platform of its kind outside Moscow to make any significant impact on the Russian financial sector right now. Moreover, the institution has posted some new rules regarding OTC cryptocurrency-based contracts. Apparently, the Russian central bank took exception to these rules and promptly filed a response.
While it is understandable that a lot of clearinghouses would want to get involved with initial coin offerings, doing so can prove to be a big problem in the long run. The Russian government isn’t a big fan of initial coin offerings right now, and a crackdown appears to be imminent. While there has been no decision to ban ICOs in Russia, it is evident this new method of raising money is causing a lot of friction among government officials as we speak.
All of this goes to show the lack of regulation related to cryptocurrencies and ICOs is causing a hindrance right now. Regulation isn’t a guaranteed problem solver in this regard, mind you, but considering the many risks associated with ICOs as a whole, they need to be addressed sooner rather than later. This stark warning issued by the central bank confirms that ICOs will be scrutinized in Russia moving forward. Whether or not this particular clearinghouse will comply is a different matter completely.