According to a report released last June 7th by Russian rating agency Analytical Credit Rating Agency, cryptocurrency is not yet usable as a means of payment.
According to the ACRA report, cryptocurrency does not yet perform the functions of fiat as the current exchange rate volatility is too high in comparison with the volatility of food prices, to allow the efficient use of crypto as payment.
their report also noted that the use of cryptocurrency does not reduce transaction costs due to cryptocurrencies perceived “energy inefficiency […] lack of economies of scale in the provision of cybersecurity [and] the low speed of entries in the register [blockchain]:”
The report continues that:
“All of these factors lower the value of the potential advantage, which is the reduction in the number of intermediaries in settlements (of banks).”
ACRA wrote that a comparison between crypto and fiat shows that cryptocurrency’s market value appears to be formed mainly by investors expectation on the readiness to sell the digital currency at a higher value in the future.
The report indicated that some factors that could increase the adoption of cryptocurrencies would include “toughening of sanctions against the backdrop of growing foreign policy and external economic tensions.”
Last week, Russian President Vladimir Putin spoke ambiguously, and mostly negatively, about cryptocurrency during a live Q and A with the public.
The Russian president did state that the national government will look into the use of cryptocurrency to avoid “any restrictions in the field of international financial activity.” This statement could have been made in reference to avoiding western economic sanctions currently imposed on Russia.
The report concludes that future cryptocurrency use in Russia is unlikely to go mainstream due to what the ARCA says is a:
“fairly tough approach to regulation by the Central Bank of the Russian Federation, high investment risks, an inadequate number of companies ready to accept payment for their goods and services in cryptocurrency, […] and lack of guarantees for the safety of funds inherent in traditional money.”
Major Russian legislation on crypto and blockchain, called “On Digital Financial Assets,” was passed almost unanimously during its first reading in the Duma last May. The finalized version of the crypto regulation bill is expected to be passed July 1st.