CRYPTOVERSE-Bitcoin runs into Russian rules and regiments

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A rep­re­sen­ta­tion of the vir­tu­al cryp­tocur­ren­cy Bit­coin is seen in this pic­ture illus­tra­tion tak­en Octo­ber 19, 2021. REUTERS/Edgar Su

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Feb 15 (Reuters) — Bristling ten­sions and loom­ing laws in Europe could offer clues to two ques­tions: Can bit­coin be a safe-haven asset? And can Rus­sia emerge as a cryp­to superpower?

The answer to the first, for now at least, is no; while fortress gold has risen 2.3% over the past week, as West­ern warn­ings about Russ­ian aggres­sion have inten­si­fied, bit­coin has lost 3%. That was worse than the 0.9% decline of the Nas­daq Com­pos­ite (.IXIC) index.

“I don’t see any evi­dence of bit­coin being a safe haven,” said Chris West­on, head of research at Mel­bourne-based bro­ker­age Pep­per­stone. “The Ukraine sit­u­a­tion with Rus­sia is a real­ly hard one to price, so in that sit­u­a­tion, you just buy crude futures.”

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Yet it’s too ear­ly to dis­miss the argu­ment made by many bit­coin advo­cates who say the cryp­tocur­ren­cy, just into its teens, is des­tined to be a form of dig­i­tal gold that should retain its val­ue when riski­er assets such as stocks tumble.

While bit­coin has slipped towards lev­els of around $42,000 in recent days, it has­n’t sur­ren­dered all the gains made from lows of $32,950 hit on Jan. 24.

Some investors also point to how rel­a­tive­ly calm trad­ing has been, at a time of high geopo­lit­i­cal ten­sion, with Rus­sia hav­ing massed more than 100,000 troops near Ukraine, though reject­ing West­ern prophe­cies of inva­sion as “hys­te­ria”.

Bit­coin’s aver­age 30-day volatil­i­ty has fall­en to 3.48%, ver­sus its 2021 aver­age of 4.56%, accord­ing to Buy­Bit­coin­World­wide’s volatil­i­ty index.

Data plat­form Coin­glass’ bit­coin Fear & Greed index, which mea­sures mar­ket sen­ti­ment — 0 indi­cates extreme fear and 100 is extreme greed — stands at 46, above the nervy 11–33 range where it had been trad­ing since late November.

Matthew Dibb, chief oper­at­ing offi­cer of Sin­ga­pore-based cryp­to plat­form Stack Funds, said he was bull­ish on cryp­to in the longer term as an alter­na­tive asset and a hedge to world events — “But not quite yet.”

“We are begin­ning to see some dis­cor­re­la­tion between bit­coin and the equi­ties mar­ket, which is very nice,” he added. “But while we’re see­ing some tra­di­tion­al safe havens pop off with the Ukraine and Rus­sia sit­u­a­tion, we haven’t real­ly seen that in crypto.”

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Mean­while: A new law for cryp­to assets expect­ed to be announced in Rus­sia this week could poten­tial­ly shape the glob­al scene.

Rus­si­a’s impor­tance for cryp­tocur­ren­cies has been grow­ing over the past year after a ban on bit­coin min­ing in Chi­na, pre­vi­ous­ly the world’s dom­i­nant cen­tre for the activ­i­ty, sent min­ers scram­bling for alter­na­tives. read more 

Rus­sia had become the third-largest cen­tre for bit­coin min­ing in the world as of last August, accord­ing to data from Britain’s Cam­bridge Cen­tre for Alter­na­tive Finance.

The Unit­ed States accounts for the largest share of min­ing, about 42.7% of the glob­al “hashrate” — the com­put­ing pow­er being used by com­put­ers con­nect­ed to the bit­coin net­work — fol­lowed by Kaza­khstan and Rus­sia with 18.1% and 11.2% respectively.

Some indus­try watch­ers believe Rus­sia might have since over­tak­en Kaza­khstan, where min­ers have con­tend­ed with gov­ern­ment inter­net shut­downs dur­ing unrest this year. read more 

It remains unclear, though, what the Russ­ian reg­u­la­tions will hold.

Last week author­i­ties said they were work­ing on rules that would allow cryp­tocur­ren­cy pur­chas­es to take place, but only through local­ly reg­is­tered and licensed com­pa­nies. Indus­try play­ers saw this as a pos­i­tive devel­op­ment after the cen­tral bank had pro­posed ban­ning the use and min­ing of cryp­tocur­ren­cies in January.

Russ­ian Deputy Finance Min­is­ter Alex­ei Moi­seev said on Mon­day that ensur­ing that mon­ey flows and cryp­to trans­ac­tions could be traced was cru­cial, includ­ing being able to iden­ti­fy users. If includ­ed in the draft law, that may dimin­ish one of cryp­tocur­ren­cies’ major sell­ing points — their anonymity.

Moi­seev also told reporters that banks and exchanges, required to com­ply with anti-mon­ey laun­der­ing laws, would be the only legal entry point for cryp­to into the Russ­ian market.

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Addi­tion­al report­ing by Lisa Mat­tack­al and Med­ha Singh in Ben­galu­ru, and Ele­na Fab­rich­naya in Moscow
Edit­ing by Vidya Ran­ganathan and Pravin Char

Our Stan­dards: The Thom­son Reuters Trust Principles.

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