In 2016, the Russian government was convinced bitcoin was a danger to its economy and a threat to its national security, so much so that politicians introduced legislation that, if passed, would spell jail time for anyone found using the technology. The offense carried a 7-year jail sentence.
One year later, Russia has established itself as a preeminent hub for bitcoin and other emerging cryptocurrencies, launching an audacious plan to grab almost one-third of the world’s bitcoin mining network from China. Everyone from the government to private businesses are embracing blockchain, the technology which powers bitcoin, and they’re doing so at an unprecedented rate.
Moscow’s change of heart has left experts guessing at what the Kremlin has up its sleeve. Theories range from Russia making a strategic decision to reduce its economy’s reliance on oil and gas through bullish cryptocurrency investment to Russian oligarchs looking for clever ways to avoid western sanctions — blockchain technology allows for anonymous exchanges, making it popular among criminal entities looking to avoid government oversight.
One thing is clear, however: change came from the top. Analysts say Russia’s sudden embrace began on June 3, 2017, when Russian President Vladimir Putin took part in the International Economic Forum in St. Petersburg. There, Putin had an unexpected meeting in the corridors of the Lenexpo Exhibition Complex with Vitalik Buterin, the Russian-Canadian programmer who created bitcoin-rival ethereum.