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Ukraine Looking to Blockchain-powered e-Currency Russia Edging Closer to Legislation Kazakh Collaboration?
This is the blockchain and cryptocurrency news roundup from the CIS this week.
Ukraine Looking to Blockchain-powered e-Currency
The National Bank of Ukraine has revealed it may develop a blockchain-based electronic version of the country’s currency, the hryvnia, instead of developing its own digital currency. The bank took to Facebook on January 11 to extol the potential virtues of the “e-hrivna”, claiming it has been looking into the idea for some time.
The news comes after 2017 ended on a series of somewhat murky notes in Ukraine. Prominent Russian blockchain and cryptocurrency expert Pavel Lerner was kidnapped by balaclava-clad men just moments after stepping out of his office in Kiev, Ukraine, ahead of the country’s long New Year break. Lerner, who was held for two days by kidnappers, works for crypto exchange platform EXMO. The company is thought to have helped foot the ransom fee of USD 1 million in bitcoin.
The news that one of the region’s most well-respected blockchain gurus had been bundled into the back of a Mercedes minivan by masked thugs in the early evening on one of Kiev’s busiest commercial streets was a major embarrassment for Ukrainian authorities – especially as the country has made so much blockchain-related progress over the past six months.
To add insult to injury, EXMO was also hit by a year-end DDoS attack, which disrupted trade as last year came to an end. Meanwhile, legal authorities claimed they had arrested a Russian national living in the southern city of Odessa. They claim the man had been operating a cryptocurrency money-laundering scheme, providing funds to Russia and Donbass-based separatists.
Kiev had previously sealed a major PR coup in late September when a collaboration between the government and blockchain company Propy saw a Ukrainian businessman sell an apartment to TechCrunch founder Mark Arrington using smart contracts via an Ethereum blockchain platform.
The Ukrainian government has high hopes for blockchain deployment in the property sector, and hopes to attract more overseas property investors to Kiev.
Plans are also afoot to begin trading Ukrainian agricultural land using blockchain-powered platforms. As some 71% of the country (once known as the Soviet Union’s “breadbasket”) is farmland, the ramifications for the blockchain world would be incredibly significant.
Meanwhile, Konstantin Yarmolenko, advisor for the head of Ukraine's agency for e-governance, recently hinted that the country could look beyond land titles and property rights with future blockchain pilots, with Ukraine’s construction industry possibly next in line.
Russia Edging Closer to Legislation
In neighboring Russia, the government has edged a step closer to implementing its long-anticipated cryptocurrency and blockchain-related legislation. The country’s Ministry of Finance has produced a draft law that would require all transactions made under smart contracts to be logged with a central, government-regulated “depository.”
The white paper also proposes taxing cryptocurrency miners, and will place a RUB 1 billion (USD 17.55 million) cap on Initial Coin Offerings (ICOs). The government will also recognize cryptocurrency coins and tokens as “digital financial assets.” The ball is now in President Vladimir Putin’s court, but if passed, the bill could pass into law as early as this summer.
The Kremlin’s official line on all things blockchain and bitcoin-related has been somewhat hard to follow of late. Officials have spoken of imposing draconian regulations while their colleagues have talked up bitcoin and blockchain – causing confusion both home and abroad.
Some of Russia’s wealthiest oligarchs, including the likes of Alexander Abramov, Roman Abramovich and Alexander Frolov, have invested heavily in a fund that is looking to foster a range of international blockchain technology and cryptocurrency projects.
Media outlets like Huffington Post and Forbes have already begun enthusing about a blockchain-powered auto maintenance platform launched by Russian entrepreneur Oskar Hartmann, the country’s equivalent of Jack Ma. Hartmann’s advisory team includes some of the CIS region’s biggest-hitting blockchain names. These include Sergei Solonin, the co-founder of online payment giant Qiwi and the CEO of Sberbank Insurance, Hannes Chopra.
Sberbank, one of the biggest banks in Russia, has recently been dubbed “the eternal leader of the blockchain conversation” by Russian media analysts. It has already conducted some 15 pilots and recently announced the launch of a new “blockchain lab” project to foster blockchain startup initiatives.
Sberbank is also a major player in MasterChain, a proposed national Ethereum-powered blockchain-platform banking initiative.
MasterChain is being developed in conjunction with many of the country’s major financial organizations and Russia’s central bank. Its masterminds hope to create a decentralized depository system for mortgage accounting, a secure customer identification system and a digital bank guarantee register.
Sberbank is also a member of the Enterprise Ethereum Alliance, and at the end of November last year, announced it had conducted its first blockchain-powered transaction. Late last year, the bank’s CEO teased, “We are still experimenting, but we hope to introduce some large-scale [blockchain] products, perhaps in 2018.”
Meanwhile, the Kremlin has said it is looking into blockchain technology solutions as part of its “cryptorouble” efforts to create a digital version of the national currency. The executive says the move could help sidestep the international sanctions that have so damaged the national economy.
Putin’s economics adviser told the press that a blockchain-powered digital currency might help it conduct “sensitive activity on behalf of the state,” adding that the development might let Russia “settle accounts with [its] counterparties all over the world – with no regard for sanctions.”
In Kazakhstan, an increasingly significant player on the global blockchain scene, President Nursultan Nazarbayev is currently mulling Putin’s recent call for a joint Russo-Kazakh IT forum. Putin says the forum could help develop the digital economies of both countries.
Kazakhstan last year launched the Kazakhstan Association of Blockchain and Cryptocurrency, a government-private sector think tank whose role will involve proposing blockchain legislation and regulating cryptocurrency exchanges. The association comprises representatives from some of Kazakhstan’s leading blockchain enterprises and liaises with the National Bank, the Ministry of Finance, and the Ministry of Economy. Many are expecting the body to produce draft legislation in the first half of this year.
However, its chairman Yeset Butin said this month that it would not be pressured into action in the year ahead.
Butin explained, “It’s not a matter of picking a date, or saying that 2018 will be the year [for legislation]. We need to work out a unified policy with the state. We need, first of all to look at what any blockchain and cryptocurrency bill might include and talk about when it would need to be adopted. Any conversation beyond this is, I think, still premature at this stage.”
The association comprises companies aiming to adopt blockchain technology to Kazakhstan’s medical, financial and engineering sectors. It claims to have received over 60 new applications for membership following its launch in November last year.