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Russian advocacy body acts over rise in crypto fraud

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Bitcoin

A major Russian advocacy body for the cryptocurrency sector has announced it will begin to release a whitelist of approved cryptocurrency companies following a number of scams.

The Russian Association of Cryptocurrencies and Blockchain (or RABIK), which was set up last year by a former advisor to President Vladimir Putin, will now indicate which Russian companies it considers to be trustworthy enough for investors both at home and abroad to do business with.

The sorts of firms the new whitelist will cover include cryptocurrency mining companies as well as those organising initial coin offerings (ICOs), advertising services, and more.

RABIK claims that the scale of cryptocurrency fraud in Russia stands at a very high level. It says that since the start of 2018 alone, around US$4.3m has been lost to the industry as a result of either poor management and business skills or fraud.

In information published on its website and picked up by industry media, RABIK said that the aim of the whitelist was to build trust within the cryptocurrency sphere.

“The list of trusted companies will allow Russian and foreign market participants to base their work on trusted organizations and minimize the risk of fraud in the creation and development of Russian or foreign business in the field of mining, trading with cryptocurrency, blockchain technology and ICO,” it said.

The development means that if a Russian company wants to join the whitelist then it has to proactively apply. RABIK said that it would generally take about ten days for an application to be reviewed. At present, there are only around fifty companies on the list.

The organisation seeks to improve the position of cryptocurrencies in the Russian economy and assist those who work in the sector.

On its website, RABIK says that its aims include working to “contribute the spread and deep integration of the blockchain technologies into the country’s economy” and the “development and implementation of concerted activities complexes related to the promotion of blockchain technology and services associated with it in the Russian Federation and abroad”.

This move comes at a time when cryptocurrency and other types of digital finance are under scrutiny in Russia. The Russian government, which is considered internationally to be proactive when it comes to use of internet technology, recently debated whether or not to institute a national Russian cryptocurrency. President Putin supports the move, and he recently announced that he was looking to name the currency the “CryptoRuble” – while also taxing it at 13% if the trader cannot demonstrate an approved source.

Last month, three draft bills discussing the industry and proposing to regulate it further were brought to the Russian parliament. Among the many points made in the complex pieces of legislation under consideration were some crucial definitions. Tokens, for example, are listed as property rather than as currency or permitted tender. The bills also sought to establish important cryptocurrency ideas in law. One of the bills contained a definition of a “smart contract”, for example, which represents a major step forward for the legal understanding of blockchain technology in the country.