Cryptocurrency: To Be Or Not To Be?

 On May 23, leading researcher of the Institute Kirill Molodyko spoke in the legal panel of the Russian Blockchain Week forum, which was held under the aegis of the Skolkovo Innovation Center, on "Why authorities could bury crypto-currencies and how is this to be avoided?".

According to Kirill, lawyers usually understand the purely legal aspects of cryptocurrency (for example, combating the laundering of funds obtained by criminal means, the protection of personal data). Sometimes they are partially aware of environmental issues, as they study environmental law at university. However, lawyers usually do not orient themselves in the technological and economic aspects of cryptocurrency, for example, for the purposes and tasks of central banks in the sphere of monetary circulation. Economists act on the contrary. But in order to protect cryptocurrency from a door-in-the-face ban on dialogue with authorities, it is necessary to take into account the entire complex of tasks which are important for authorities; to build a dialogue with public authorities. In the speaker's opinion, such a dialogue, although it is being conducted, is clearly not sufficient.

 

Kirill analysed various fears of the state authorities regarding cryptocurrencies. In his opinion, some of the crypto community mistakenly believes that it is smarter than the State, and will satisfy all of its "wishlist", not based on the interests of the authorities - and will win from the state when playing a "long game". In fact, without dialogue with the state, the maximum can only be "creamed off the top" by the very first movers during a very short time. For example, bitcoin and etherium are extremely volatile. It's hard to believe that the authorities will allow a long-term exchange of currencies with such volatility and a sharp, unjustified fluctuation in value. The cryptosystem community should offer authorities ways to reduce the volatility of cryptocurrency.

 

What is the use of cryptocurrency for society? Sometimes it is asserted that they contribute to the further transfer of settlements into a non-cash form. But in January 2018, Patriarch Kirill reasonably noted that excessive cashless turnover can lead to, in fact, the exclusion of citizens from society by blocking their accounts, for example, for lack of loyalty to the authorities. Our Kirill (Molodyko) expressed in this context the view that cashless money circulation is good up to a point; without the need to get too deeply involved in any implementation which might unreasonably besmirch the role of cash.

 

Sometimes it is asserted that cryptocurrencies can increase the convenience and speed of settlements. But rather slow calculations on blockchain have not yet confirmed this.

 

Also, Kirill dwelled on the prospects for the emergence of global regulation of cryptocurrency, analysing the discussion of the relevant topic by the finance ministers and heads of central banks of the G20 Central Bank in Buenos Aires on March 20 of this year.