Regulations for cryptocurrencies and their underlying blockchain technology is badly needed in Russia, but just how tough the regulations should be is a question of hot debate, according to the participants of the conference "Blockchain technology, cryptocurrencies and other products as intellectual property", which was held in Moscow on December 6.
On the whole the participants drawn from across the industry believe a moderate and considerate approach is needed as it is vital to make sure that the public and private sector benefit from the cutting-edge technology.
“The current situation with cryptocurrencies and blockchain is not a bubble, but part of inevitable changes in the global economy,” said Yuri Pripachkin, president of the Russian association of cryptocurrencies and blockchain.
The government has also said it wants to regulate the business, but the range of views amongst officials are spread across the gamut from the Ministry of Finance which believes cryptocurrencies are nothing more than a Ponzi scheme to president Vladimir Putin who is “dizzy” with excitement. For their part the conference’s participants were sceptical about the government's ability to regulate the cryptocurrency market in any traditional way.
"Talking about regulating blockchain would be just the same as talking about regulating Mendeleyev's periodic table, deciding in what order the chemical elements should be placed there," said Dmitry Marenichev, Russia's internet ombudsman. "They need to be in a certain order, but you can't reach that order from the law's viewpoint, it has to be some kind of inspiration."
"True, regulation is necessary, but it has to be based on totally different premises, on the idea that the blockchain technology is to completely change our life," he went on to say.
According to Marenichev, blockchain has all attributes to be a self-regulating system.
"Blockchain is a technology that shouldn't allow breaking the rules," he explained. "Here, relations are based on technology rather than paperwork."
Russian business ombudsman Boris Titov was less categorical about a possible role of the government in regulating blockchain, but he warned about chaotic governing of the sector, the rules of which many don't yet understand.
"Regulation should create opportunities rather than restrictions," he said. "For instance, in China, regulation of blockchain has been chaotic."
According to Titov, it is too early to introduce any systemic laws governing blockchain in Russia. However, he added, some sort of a "legislative playground" should be created as fast as possible to test ways the area of blockchain and cryptocurrencies could be regulated."
"We need to prove that blockchain is a reliable system first," he concluded. "Then it could be included into the legislation."
Meanwhile, participants pointed to a number of major issues related to cryptocurrencies and blockchain – from cryptocurrency mining by private individuals who benefit from low electricity rates for households but pay no taxes, to insufficient protection of investors in initial coin offerings (ICOs).
Still, while tools for protecting investors in ICOs need to be developed, “the ICO should remain what it is now – a simple and convenient instrument for attracting funding,” said Alexei Lisitsin, advisor to the head of the National Payments Council.
"ICO should not turn into a digital analogue of IPO, with its high costs, strict time frame and other specifics," he said. "ICO is about attraction initial capital for an idea as opposed to IPOs which are done by already established companies."