Will Russia continue to be a major player in cryptocurrency? In this segment of "The Crypto Show" on Motley Fool Live, recorded on Feb. 2, Fool contributors Jon Quast, Chris MacDonald, and Travis Hoium discuss Russia's current stance on cryptocurrency and how it could affect future regulation.
Jon Quast: Last week on "The Crypto Show," we did talk about how Russia's central bank was proposing an all-out ban on not just Bitcoin (BTC 0.48%), but all cryptocurrencies, and then President Vladimir Putin coming out afterward saying, "You know what, we actually as a country have a competitive advantage when it comes to mining cryptocurrencies," and he wants to see regulation, not an outright ban.
Interestingly enough, Russia is the third-largest country as far as Bitcoin mining is concerned, the U.S. is No. 1 at the moment, it was China at one point, China going the all-out ban route, so now, U.S. is No. 1 and Kazakhstan is No. 2 as a lot of those Bitcoin miners have moved out of China into Kazakhstan. But Russia at No. 3 here.
If you are a cryptocurrency investor, I think one of the things that you do fear long term is will governments crack down on this. Now, you're seeing big countries like India and Russia, where you weren't sure where they were going to fall on this saying, "You know what, we would prefer to regulate." This is a very good thing, in my opinion, if you're a Bitcoin investor or investor in cryptocurrencies in general.
Chris MacDonald: Russia is a big player in the energy space and their power grid is generally viewed as one that's stable so it's an interesting market. It's an interesting approach from Putin to do a shift to 180 on this. I know it was the Russian central bank that initially put this out, but it seems like there was some backlash. I was reading that industry experts in Russia were saying that tech workers could leave the country en masse if they impose some series regulation on miners.
In essence, it's interesting because miners are right now an important piece of the Bitcoin puzzle and that's current state. But I think Russia is maybe thinking about this a little bit longer term and how is this going to impact us maybe five or 10 years down the road. That's my take from this shift in their political perspective.
Travis Hoium: This is the same thing we talked about with Texas and Arizona. This is about where do you want to have the next crypto Silicon Valley? Whatever, we're going to call that. All of these countries, including the U.S., are going to be fighting to have the development work and the next giant companies be built in their country and banning crypto or putting onerous regulations is the way to get people to move elsewhere and we're already seeing developments all around the world.
That's going to be the balance for government is, you need to put rules around things. Andreessen Horowitz has got a team of lobbyists who are trying to get rules written in a favorable way in Washington, D.C. But you see you need rules, but you also don't want to ban things because then you kill the innovation and make it move elsewhere and that's what all these countries and states are going to be grappling with over the next few years.
