Russia intends to use its digital ruble, to be introduced early next year, for payments with its key ally, China. Authorities in Moscow hope other nations will be willing to adopt the Russian digital currency in trade, which will allow the country to circumvent sanctions imposed over the Ukraine war.
The Central Bank of Russia is gearing up to launch settlements with the digital ruble, the new incarnation of the Russian fiat currency that’s now being tested, as early as 2023. According to a statement by a prominent member of the lower house of Russian parliament, the sanctioned nation wants to use it in payments with China, which has become Russia’s main trading partner.
Limited access to the global financial system due to financial restrictions introduced in response to its military invasion of Ukraine is forcing Russia to seek alternative means for foreign trade transactions. Alongside cryptocurrencies, the digital ruble is one of the options Moscow is considering in its efforts to bypass the sanctions.
“The topic of digital financial assets, the digital ruble and cryptocurrencies is currently intensifying in the society, as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements,” the head of the Financial Market Committee at the State Duma, Anatoly Aksakov, recently told the Parlamentskaya Gazeta newspaper.
The high-ranking lawmaker elaborated that the digital direction is key because financial flows can circumvent systems controlled by unfriendly nations. He added the next step for the central bank digital currency (CBDC) issued by the Bank of Russia would be to introduce it in mutual settlements with China. Also quoted by Reuters, Aksakov emphasized:
If we launch this, then other countries will begin to actively use it going forward, and America’s control over the global financial system will effectively end.
With the loss of markets in the West, including for energy exports, the importance of cooperation with China has increased significantly for Russia. Trade between the two countries has expanded and Russian companies have started issuing debt in Chinese yuan. Beijing is currently conducting domestic trials of its digital version, the e-CNY, and plans to use it in cross-border settlements, too.
Russia is preparing to adopt comprehensive regulations for its crypto market in the coming months, including a new bill “On Digital Currency” that will expand the legal framework established last year by the law “on Digital Financial Assets.” Russian regulators are already developing a mechanism for international crypto payments and the respective draft provisions have been already agreed upon by the central bank and the finance ministry.
Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
The Bank of Russia has announced plans to connect all Russian banks to the digital ruble in 2024, as it fast-tracks plans to circumvent sanctions. Cross-border integration with the digital yuan and the central bank digital currencies (CBDCs) of other “friendly” countries” will remove the need for Swift, a central bank official said. As well as “gradually connecting all credit organisations”, the Bank of Russia will increase the number of “payment options and transactions using smart
The Central Bank of Russia emphasized that the pilot project aims to better understand the regulatory, legal, and technical aspects of CBDCs, and plans to launch an official digital ruble within a few years. Russia’s central bank’s latest monetary policy said the country plans to connect the digital ruble platform to all banks and credit institutions by 2024.
In March 2024, a new round of elections will be held on whether the current Russian President Vladimir Putin will be re-elected. By then, the digital ruble is expected to have completed customer-to-customer transaction trials and customer-to-business and business-to-customer settlements.
To facilitate the rollout of the digital ruble, the Bank of Russia will also conduct a beta test of the digital ruble-based smart contract with a limited number of participants in 2023. At the same time, it is expected that in 2025, the offline mode of the digital ruble will be completed. The Bank of Russia noted that the Russian economy is increasingly digitized, thus requiring an advanced payment system based on a government-backed digital currency.
VTB Factoring, a subsidiary of Russia’s state-owned bank, reported the first major deal with digital finance assets. As part of the deal, the bank subsidiary acquired a tokenized debt pool of the engineering company Metrowagonmash, issued via the fintech platform Lighthouse. On Wednesday, June 29, VTB reported the deal on its webpage, claiming it to be the first issuance and placement of digital financial assets secured by cash in the Russian Federation. In the announcement, the bank compares it with the issue of short-term commercial bonds.
n June 2022, the largest Russian bank Sber announced its first operation with the digital financial assets (DFA) to take place in mid-July, after finally obtaining a license from the country’s central bank. While current legislation on the DFA was put in force in 2020, the head of the Financial Markets Committee of the Russian parliament’s lower chamber introduced a bill that would prohibit the use of DFA as a “monetary surrogate” in June 2022.
In February 2022, VTB conducted the first successful testing of the operation with “digital rubles,” a central bank digital currency (CBDC) project of the Bank of Russia. Later, the bank announced its first purchase of DFAs in exchange for the digital ruble. At press time, there is no information on whether the aforementioned deal was made via CBDC.
It was 8:45 in the morning of June 13 when Bill Stewart, the CEO of Maine-based bitcoin mining business Dynamics Mining, received a call from one of his employees. “He’s like, ‘Every machine inside of our facility in Brunswick [in Cumberland County, Maine] has been taken,’” Stewart says. “That’s crazy. I couldn’t believe it.”
He alerted personnel manning another mining facility, in nearby Lewiston [in Androscoggin County, Maine], and told them to “be on their toes.” He thought a burglar was at large. Stewart had a theory on who might have taken the machines: In those days he had been wrangling with a customer, Compass Mining—a Delaware company that allowed people to buy mining machines and have them hosted in third-party facilities like Stewart’s—due to a dispute over energy bills. Stewart thought Compass had to pay for them; Compass believed their contract said otherwise.
A few days earlier, Dynamics had sent Compass a termination letter demanding payment, and shortly thereafter had switched the company’s machines off. Then, Compass Mining staffers had taken their equipment away from Brunswick, and they were about to enter the Lewiston plant to recover more machines. “They’re trying to get inside the building,” Stewart says. “And I’m telling my brother, who runs our security, ‘Do not let them into the building. We’re not ripping miners out of the wall. Do not let them inside.’”
In a lawsuit filed against Dynamics in the Delaware Court of Chancery on June 21, Compass Mining alleged that Stewart, having refused to foot the energy bill he was supposed to pay, had been “holding this valuable equipment hostage to gain leverage in negotiations.” The way Stewart tells it, he simply wanted the removal to happen in an orderly fashion as opposed to hastily and under cover of darkness. What’s more, he says, for a while he had considered continuing to host the machines on behalf of Compass’ customers, cutting out the middleman.
“Their customers were reaching out, saying, ‘Hey, can we just mine directly with you?’” Stewart says. The reason that couldn’t happen, Stewart says, is that Compass had not given its customers the identifying serial numbers of the machines they had bought, and there was no way for Stewart to know who owned what.
On July 5 the Court granted Compass’ request to get its machines back, but underlined that that should happen following a formal request to unmount and relocate the machines. Stewart says that during the removal, Compass’ team also grabbed one of Dynamics’ own servers—that is confirmed in an email by one of Compass’ lawyers to Stewart, mentioning how the server had been “inadvertently scooped up” and asking how to return it.
“Our team is laser-focused on serving our clients, and will do so in accordance with the contracts we have in place with our service providers, and by resolving any disputes arising from a fundamental misunderstanding of these contracts in a court of law,” Compass interim co-CEO Thomas Heller said in an email interview.
Even if Compass had prevailed, the optics of the row was terrible. Stewart had chronicled the dispute on Twitter as it played out—accusing Compass of owing him hundreds of thousands of dollars in energy bills, and of having essentially broken into Dynamics’ facility—and thundered at length against Compass in Twitter Spaces. After a vertiginous rise, Compass had spent the last few months in constant crisis mode, until—mere hours after Stewart had started tweeting about his early-morning showdown with the company—it decided to do away with its CEO.
At the center of that crisis was Russia’s war with Ukraine, and a bespectacled, curly-haired cybersecurity entrepreneur called Omar Todd. Todd, based in Australia, cofounded the pro-Julian Assange WikiLeaks Party in 2013—which went on to compete in the Australian national election and secure 0.6 percent of the vote; in 2016, he joined the pugnacious marine conservation charity Sea Shepherd as a director. In recent months, his work description has grown once more:
In his spare time, Todd is orchestrating an international legal effort to rescue thousands of bitcoin mining machines from Compass in Siberia. The approximately 4,000 mining rigs, whose value Bloomberg has reported at $30 million, are stranded in Russia due to Western sanctions following Moscow’s invasion of Ukraine. The machines had initially operated in a Russian mining farm under a partnership between Compass, and Russian firm BitRiver. Compass had sold machines to ordinary users and installed them in a BitRiver facility for the price of the rigs plus the payment of a monthly hosting fee.
In April 2022, when the US Office of Foreign Assets Control (OFAC) designated BitRiver a sanctioned organization, Compass ended its relationship with the company to avoid breaching the sanctions. BitRiver turned the machines off and told individual Compass customers who wanted to reclaim their valuable gear that all the machines legally belonged to Compass, according to evidence submitted in a California lawsuit brought against Compass by Veribi LLC, a Nevada-based customer, on July 1.
Both customers who had their serial numbers and those who did not discovered that, in BitRiver’s eye, they held no title to the devices they had purchased—unless Compass stepped in, the machines would stay in Irkutsk, Siberia. “Compass Mining refused to communicate with us and, unfortunately, refused to deal with the return of the equipment,” BitRiver spokesperson Andrei Loboda says in a WhatsApp message. Compass’ Heller describes that characterization as “false” in an email interview. “Compass’ management team will continue to make efforts to assist its customers while maintaining compliance with OFAC regulations,” Heller says.
With nowhere to turn, and millions in sunk costs, customers turned to Todd. “I floated to the top because I was the most public individual,” he says. Todd’s company SkyWiFi Pty raised tens of thousands of dollars through a Discord server for Compass customers. (Todd won’t say exactly how much, but public Discord messages suggest that it is north of $60,000.) He says these funds will be used to retain lawyers and other experts in the US, Russia, Australia, and the UK and broker a solution on customers’ behalf.
However, two lawyers featured on the list of advisers Todd provided to the crowdfunders—Erich Ferrari and Vasily Kuznetsov—say they had not in fact been retained and were not planning to work on the case; on August 1 Todd removed some names from the list and notified WIRED of the change in an email.
A good outcome, Todd says, would be to transfer the machines to a Russian facility run by a non-sanctioned organization. Todd says that while Compass’ legal team has been cooperative, the company’s strategy has largely boiled down to watching and waiting. “Compass Mining is waiting for me to help them—they have no answers,” he says.
Customers rallying behind SkyWiFi have accused Compass Mining of blundering its way into this situation. Following Russia’s invasion of Ukraine on February 24, many customers feared that their mining machines would be caught in the brewing geopolitical crisis, and some asked for the equipment to be removed. “I told them, ‘Listen, let’s move the miners out of Russia. It doesn’t make sense to continue to deploy there,’” recalls one customer, who asked not to be named because they still have ongoing business with Compass. “A lot of other people did the same.”
Compass’ response, in a March 4 Discord message, has earned meme status among its customers. The company’s then-CEO, Whit Gibbs, wrote that the situation was “‘business as usual’ and there is no reason to be worried.” Gibbs went on to underline BitRiver’s links to the Russian government, implying that they would make the operation safer. (BitRiver did not comment on these supposed links.) “If the situation changes, Compass will take swift action to remove all machines out of Russia immediately,” Gibbs added.
Compass did offer customers the option to get out of the contract and take their machines elsewhere, but Todd says it was unclear how that would play out. “Some people wanted their miners returned, and they were told that there’s just no shipping or logistics available,” he says. “Really, there was no choice for anybody apart from waiting for Compass.”
The customer says that when their business partner called Compass to inquire about pulling the equipment out of Russia, he was told that “they could not guarantee they could safely remove the machines.” According to emails shared with WIRED, the customer’s own request to deploy some of the machines they had ordered to a US facility instead of Russia was rebuffed by Compass. The customer says that between the cost of the machines marooned in Russia and the lost revenue due to their sitting idle, they have so far lost around $70,000.
The customer says that despite multiple requests, they still do not know their machines’ serial numbers. “Clients can easily obtain their serial numbers by contacting our Support team,” Heller says. Veribi, the Nevada company that is taking Compass to court in California on charges of breach of contract, negligence, conversion, and fraud, alleges a loss of over $1.5 million. From its evidence, however, it does appear to have received its 20 machines’ serial numbers.
On April 20, 2022, when the OFAC eventually decided to sanction BitRiver for “help[ing] Russia monetize its natural resources,” Compass sent a lawyerly email to its customers on April 21 announcing the ending of all relations with BitRiver. Compass asked for customers’ permission to sell their machines and recover at least some of the money, which Todd describes as “a fire sale,” a scenario that most customers—some of whom had paid up to $13,500 per mining machine—could not stomach.
As Compass’ Discord filled with angry customers, Gibbs delivered a curious barb. “You could have hosted in another country, you chose Russia. take some personal responsibility [sic]” he wrote. Gibbs declined to comment for this article. Eventually, the company shut its Discord server down for good. That, Heller says, was due to the fact that “using Discord to support thousands of clients was unstructured and lengthened our response times.”
After that, Gibbs had to “fall on his sword,” Todd explains. “There was just too much hype to the guy. He said too many things which turned out to be disingenuous at worst.” On June 28, Gibbs and Compass’ chief financial officer, Jodie Fisher, both resigned, with Heller and chief technology officer Paul Gosker stepping up as co-CEOs. It wasn’t only Compass customers, who by then had congregated on another unofficial Discord server, celebrating Gibbs’s departure; even some Compass employees expressed some relief.
In a Discord message posted the day after the announcement, Compass sales manager Andrew Nagel said that the two days after Gibbs’ resignation had been “the best days I’ve had in a long time.” He noted that Compass’ customer service had been “poor” for a long time. Even before the Russia affair, 2022 had been plagued by delays in the company’s US operations, culminating on June 27 in the public fallout with Dynamics.
Under the new leadership, the hope was, things would be different. But many Compass employees wouldn’t remain at the company long enough to see that happen. On July 7, the company announced the layoff of 15 percent of its workforce, as well as compensation and spending reduction across the board. The message was that Compass had grown “too quickly” and that had made it dysfunctional.
Compass is in many ways emblematic of a very specific age in crypto history. Buoyed by a pandemic-induced craving for novel risky assets, the price of bitcoin had grown vertiginously since late 2020, eventually touching its all-time high of $67,000 in November 2021. Compass Mining was incorporated in August 2020 with a business model predicated on the idea of allowing ordinary people—jocularly called “plebs” in the company’s now defunct Discord—to mine crypto.
According to CoinDesk, in its first two months of operations, Compass sold $11.4 million in mining rigs to its customers, and by March 2021, it was raising $1.7 million from cryptoland household names such as Mike Novogratz’s Galaxy Digital. Before even celebrating its first anniversary, Compass was throwing a yacht party in Miami. But in 2022, when growing inflation, Russia’s warmongering, and high-profile industry scandals brought crypto prices down—with a sector-wide loss of about $2 trillion—Compass, like many others, started experiencing problem after problem.
Still, even after this fallout with its own customers, Compass’ reputational damage is nothing compared with the more serious financial difficulties that many other bitcoin mining companies, including some publicly listed ones, are facing. “In Compass’ model they deal with retail, which has a really strong voice online, so their issues are broadcasted to the public with a speakerphone,” says Ethan Vera, cofounder and chief operations officer of crypto-mining infrastructure company Luxor Mining.
“But the 2021 mining cycle has left many companies in a tough position. Over-leverage, too rapid growth, and purchasing machines at the top of the cycle is the common theme that will lead some companies to bankruptcies or fire sales of their assets.”
The Treasury Department on Monday sanctioned a cryptocurrency firm with ties to a North Korea state-sponsored hacking group for allegedly facilitating malicious laundering—marking the latest retaliatory measures against so-called virtual currency mixing services, which effectively obfuscate cryptocurrency transactions to make them more difficult to track.
In a statement Monday morning, the Treasury announced it was sanctioning Ethereum-based Tornado Cash for allegedly helping to launder more than $7 billion worth of cryptocurrency since its creation in 2019, effectively freezing U.S. assets on the platform and barring Americans from using the service.
Laundered funds included over $455 million stolen by North Korea hacking ring the Lazarus Group in the largest known virtual currency heist to date—when North Korean cyberattackers stole some $620 million from an Ethereum-linked platform for NFT-based video game Axie Infinity in March—the Treasury said.
On its website, Tornado Cash says it has helped nearly 40,000 users obfuscate transactions through more than 150,000 deposits that help “achieve privacy” by using smart contracts to route funds to an address with no ether balance and then send it to a new public address that has no link to the original sender.
In a Monday statement, the Treasury’s Brian Nelson said Tornado Cash repeatedly failed to impose effective controls and “basic measures” designed to stop it from laundering funds for malicious cyber actors and pledged to continue to “aggressively” pursue actions against mixers that launder cryptocurrency for criminals.
The move follows the Treasury’s first-ever sanctions on a virtual currency mixer in May, when it designated Blender.io for allegedly also helping to carry out the Lazarus-backed crypto heist in March—to the tune of more than $20.5 million worth of illicit proceeds.
In addition to the heist in March, Tornado Cash was also used to launder more than $96 million of funds derived from a June hack of blockchain bridge Harmony and at least $7.8 million from an attack on Nomad, which lost about $190 million in a security exploit just last week, according to the Treasury.
Treasury officials this year have unleashed a wave of sanctions to protect against the potential use of cryptocurrency for sanctions evasion and money laundering. Shortly before the first mixer sanctions, the Treasury in April designated a cryptocurrency mining firm for the first time—targeting Switzerland-based Bitriver AG for operating in the Russian technology sector. Also that month, the Treasury designated Moscow-based exchange Garantex for “willfully disregarding” anti-money-laundering obligations and “allowing [its] systems to be abused by illicit actors.”
In a post on its website, crypto policy think tank Coin Center criticized the Treasury’s Monday decision for “sanctioning a tool that is not an alias of any person meriting sanction,” and said the move effectively limits “any American who wishes to use her own money and a freely available software tool to maintain her own privacy—including for otherwise entirely legal and personal reasons.” According to Coin Center, the sanctions also have uncertain legal ramifications because they potentially put Americans who are sent money through a Tornado address at risk of violating the Treasury’s rules—even though they can’t reject the transaction due to the nature of blockchain.
I’m a senior reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business
You may be familiar with the saying “The future starts now.” As catchy as this phrase may be, it is fundamentally not true. The future doesn’t start now, or tomorrow, or next month—at least not if you want to get the most out of mental time travel. It takes much longer than that for the full benefits of the future to kick in. But when exactly the future starts depends on who you are and what your life circumstances are like. Let me tell you about a simple game I invented. If you play along, you’ll get a pretty good idea of when the future starts for you.
Every time I teach a futures-thinking class, I begin with a quick game of When Does the Future Start? I ask everyone: “If the future is a time when many or most things in your life will be different than they are today, how long from now does that future start?” I ask them to write down their answer in days, weeks, months, or years.
This isn’t a trick question, and there’s no single correct answer. In fact, usually there are dozens of different answers, all of them valid: a year from now, five years from now, 10 years from now, twenty years from now. (If you want to play along, go ahead and think of your answer to this question now.) That said, 10 years is far and away the most common answer to the question “When does the future start?” In the responses I’ve collected from more than 10,000 students, almost everyone agrees: Ten years is enough time for society and my own life to become dramatically different.
What makes 10 years such a magic number for the mind?
Most of us have internalized the power of 10 years to create change through a combination of our own lived experience and social convention. We think about our own lives as a series of 10-year-long periods: our 20s, our 30s, our 40s, and so on. We use these milestone birthdays to reflect on what we want our next decade of life to be like.
And we talk about decades as units of time in which society changes: think about how different the 1920s were from the 1910s, the 1960s from the 1950s, or how different the 2020s have already been from the 2010s. Anyone who has lived through more than one decade, or studied history, already has a clear mental model of just how much can change in 10 years.
If you look at recent history, 10 years really does seem almost like a magic number. You can find myriad examples of new ideas and actions creating a previously unimaginable social reality over the time span of a decade, give or take a few months. This is particularly true when it comes to social movements achieving historic victories, and new technologies achieving global impact. To consider just a few examples, it took, give or take a few months:
• 10 years for the civil rights movement against racial segregation in the United States to go from its first boycott of segregated bus seating to the successful passage of the federal Civil Rights Act (1955–1964)
• 10 years for the first international economic sanctions against South Africa’s segregationist apartheid system to lead to a new constitution that enfranchised Black South Africans and other racial groups (1985–1996)
• 10 years for same-sex marriage to go from being considered controversial when it was legalized by a country for the first time (the Netherlands) to being supported in global surveys by a majority of people in a majority of countries (2001–2010)
• 10 years for marijuana to go from being legalized for all uses in one US state, Colorado, to being decriminalized in 44 out of 50 states (2012–2021)
And it took:
• 10 years from when just 16 million people, mostly scientists and other academic researchers, were using the internet—they thought it would be used mostly to share scientific data—to when 1 billion people were using it (1991–2001)
• 10 years from the first iPhone release until a majority of people on the planet had smartphones, creating a new era of always-on communication (2007–2017)
• 10 years for Facebook to go from one user to 1 billion daily users, on its way to becoming the first product used by more than 1 in 3 humans on the planet (2004–2015)
• 10 years for Bitcoin to go from being a hypothetical idea discussed in a scientific article to having a nearly $1 trillion market capitalization, larger than the three biggest U.S. banks combined (2008–2019)
• 10 years from Airbnb’s and Uber’s foundings for a full 36 percent of U.S. workers to be engaged in some form of “gig work” (2008–2018)
• 10 years for Zoom to go from its first user testing session to becoming a critical lifeline for humanity during the COVID-19 pandemic, as the de facto tool for learning, work meetings, and staying in touch with friends and family (2011–2020)
In other words: Things that are small experiments today in 10 years can become ubiquitous and world-changing. And social change that seems improbable or unimaginable—well, in 10 years that can change, too.
Of course, not all goals for change can be achieved in a decade—many social movements take much longer. And progress doesn’t just stop after 10 years. The purpose of looking 10 years ahead isn’t to see that everything will happen on that timeline—but there is ample evidence that almost anything could happen on that timeline. And for that reason, 10 years helps unstick our minds. Ten years helps us consider possibilities we would otherwise dismiss.
Ten years even relaxes us a bit as we try to imagine preparing for dramatic disruptions or for a radical rethinking of what’s normal—because 10 years gives us time to get ready. And it’s for this reason that whenever I send people on mental time trips to the future, I almost always send them 10 years ahead. Futurists want people to go somewhere they believe anything can be different—even things that seem impossible to change today.
When we think on a 10-year timeline, it’s not just that we are more likely to believe that dramatic change can happen in the world. We become more optimistic and hopeful about what we can change through our own efforts. This has to do with a psychological phenomenon known as time spaciousness. It’s the relaxing and empowering feeling that we have enough time to do what really matters—to consider our options, make a plan, and act more confidently to create the future we want.
It is almost impossible to create a sense of time spaciousness when we’re thinking in a matter of days or weeks. But when thinking ahead 10 years … ah, it’s so much time! On a 10-year timeline, we don’t feel rushed. We have plenty of opportunity to develop new skills, collect resources, recruit allies, learn from our mistakes, bounce back from setbacks, and do whatever else we need to do to get the best possible outcome. This feeling of abundance makes us less risk-averse and therefore more creative. We have all the time we need to play with ideas, try new things, and experiment until we figure out what works.
Interestingly, brains respond to abundant space in the same way as they do to abundant time. Studies have found that we also think more creatively and set higher, “maximal,” goals for ourselves when we’re in rooms with higher ceilings or outside in a wide-open environment. With maximal goals, we focus on the upper boundary: What is the highest and best possible outcome we can imagine? So I like to think of a 10-year timeline as a kind of cathedral or Grand Canyon for the mind. It lifts the ceiling on our imagination.
When we feel time-poor, on the other hand, it’s like being stuck in a tiny, depressing room with no windows. We shrink ourselves and imagine less. We adopt “minimal” goals, which means we try to do just enough to avoid a bad outcome. As one team of expert psychologists put it: “A maximal goal reflects the most that one could wish for, whereas a minimal goal reflects bare necessities or the least one could comfortably tolerate.”
Do you have a sense of whether you’re waking up each day focused on maximal or minimal goals? Whether you’re feeling time-rich or time-poor? Setting goals for yourself (or your family, or your community, or your organization) on too short a timeline usually creates the feeling of being time-rushed. So does being too busy, but that’s not something you can always control. So rather than drastically reduce what’s on your schedule, it’s much easier to control how far out in the future you’re imagining when you think about changes you’d like to achieve.
You may not be used to goal setting on a 10-year timeline. We usually think about making personal change year by year, most commonly by making resolutions at the start of the New Year. But a one-year resolution won’t help you think maximally, and you won’t feel a sense of time spaciousness if you’re trying to achieve a big goal in just one year. So next New Year’s Day, why not try a new tradition? Make a 10-year resolution.
What could you (or your family, or your community, or your organization) accomplish if you had 10 years to do it? What would the long-term impact of a new habit be if you practiced it for 10 years? Let your mind play with some bigger possibilities. Now this idea may not sound appealing to you at first. When it comes to making resolutions, you don’t want to be different in 10 years; you want to be different as soon as possible! So go ahead and keep making short-term resolutions. And try to stretch your imagination a decade further too, while you’re at it.
If you want to get a taste of time spaciousness right now, here’s a trick you can try: pick a tiny task—and give yourself 10 years to do it. You might think that having all this time will make you more likely to procrastinate, and you’ll never actually get around to doing it. But procrastination, paradoxically, is more likely to happen when you feel time-poor. When you feel like you have less time to get things done, you do less.
And when you feel you have ample time, you do more. Studies show this is true completely independent of how much “free” or unscheduled time a person has. What matters is whether your brain perceives an abundance of time. So give it a try. Give yourself luxurious 10-year deadlines. You might be surprised at how much faster and more happily you do things you’d otherwise put off when you feel time-rich, and therefore more in control of your timeline.
I want you to try this, for real: go ahead and put a deadline, or some other small goal, on your personal calendar, for 10 years from today. Google’s and Apple’s calendar apps will let you schedule things 10 years in the future. While you’ve got your mental or digital calendar open, let’s try a mental time trip. Imagine it’s 10 years from today, and you wake up incredibly excited about … something. You’ve got a special event on the calendar. What is it?
To help you imagine this future more clearly, skip ahead in your digital calendar to 10 years from today. Now, fill in the blank space. What do you have planned, 10 years from today? Who are you doing it with? What will you be wearing? What supplies will you need? Why is this activity important or exciting for you? And how do you feel now that the day is here? Try to answer all these questions and imagine the day ahead as vividly as you can. Be sure to think about how you and your life circumstances might be different from today, and how those differences might change what you want or are able to do.
As with any mental time trip to far in the future, it may take a few moments for your brain to start filling in the blanks. Sometimes it helps to plant the seed of imagination in your mind now and come back to it later. Just keep the calendar open and keep playing with possibilities. My challenge for you is to put something exciting—maybe even something life-changing—on your real-world calendar for 10 years from today. You’ll have a whole decade to decide if you want to actually make it happen.
Sanctions can only work if those who are supposed to enforce them understand exactly what to do so that they cannot be circumvented easily. Russia’s extensive network of Over-The-Counter (OTC) providers requires an extensive review by sanction committees, as they might be adopted to circumvent sanctions.
The fifth EU sanction package on Russia limits the crypto asset holdings of Russian nationals, individuals, and legal entities established in Russia to €10,000 (with the same account, wallet or custody provider). The use of Russian OTC providers, which represents a network of physical providers offering cash payouts from crypto, could be adopted to circumvent these sanctions.
In oversimplified terms, OTC refers to a process in which individuals theoretically could agree on a price and meet to complete a transaction. An example of such a process could be a personal meeting in which one side brings bags with cash or any other pre-agreed means of value, and the other side could conduct a transaction on the blockchain on the spot. Transactions primarily with larger sums of money could be risky, to say the least.
Contrarily to peer-to-peer exchanges (P2P) which involve independent parties, OTC exchanges act comparable to physical pawn shops. At dedicated physical locations with announced opening hours, individuals can visit and exchange their cryptocurrencies in Russia for cash or bank transfers.
Depending on the business models of virtual assets service providers (VASPs), both OTC and P2P providers have existed in various jurisdictions since the beginning of financial interactions between individuals.
An example of such a platform in the EU is LocalBitcoin, registered with the Finnish Financial Supervisory Authority. Unlike Russian OTC providers which are subject to the 6th Anti Money Laundering Directive of the EU and connected to its so-called Counter-Terrorism Financing (CTF) legislation, LocalBitcoin is a unique case.
Existence of such a platform in the EU is only possible in Finland, as the rest of the EU has followed the recommendation of the Financial Action Task Force (FATF) to define and include Digital Assets in the national legislation and created an oversight program as a regulator.
It can be argued that the current regulatory frameworks remain far from perfect, but there is increased interest in incorporating DeFi into traditional financial compliance programs.
Such requirements to register a P2P or OTC exchange are way different within the Russian Federation. On the one hand, Russia approved use of cryptocurrency as an investment tool or a payment method as of Q1 2021 but on the other its national bank proposed a long list of bans that should outlaw the circulation of cryptocurrencies within the country.
Due to such unclear legal circumstances, licensing and supervisory programs are close to non-existent. In the absence of platforms that have chosen ‘compliance excellence’ as their differentiating business strategy, for example, Coinbase or some Scandinavian VASPs, many Russian providers have to operate in the gray space to say the least.
What is surprising is the fact that even though Russians store up to one fifth of the national bank’s reserves in digital assets, the public side has decided to not provide much clarity for the VASPs or any other players in Decentralized Finance (DeFi).
By not providing clarity for players in the Digital Assets space, the governments in Moscow and Minsk continue to lose on potential tax revenues and regulatory oversight of over 623 crypto platforms identified so far, associated with Russia and Belarus. The logic to continue to lose out on easily taxable capital gain from crypto investments remains questionable.
“Is it not paradoxical that despite the Russian Prime Minister stating that Russians hold $200 Billion USD in crypto, Russia has not yet formulated a comprehensive legislation to legalize crypto or set a taxation process for it?” — Dominika Kuberska, PhD, Faculty of Economic Sciences, University of Warmia and Mazury in Olsztyn.
With the absence of regulated players in Russia, there is a well-developed gray market of OTC exchanges that facilitate the trade of Digital Assets in exchange for rubles using both cash and bank transfers.
Sources, who desire to remain anonymous, underline that bank transfers to individuals or entities from OTC brokers are labeled as payments for IT or consultancy services. The Russian government will officially tax profits from such transfers with personal or corporate income tax (PIT, CIT).
Moreover, for customers that desire to purchase or exchange a significant amount of digital assets, there are at least ten physical brokers in Moscow or even price comparison websites like BestChange.ru that display the current rates of OTC providers in various regions.
Due to the nature of the business model, customers can often exchange cash for digital assets at the physical offices of these exchanges which can be visited by both individuals and the members of the Russian financial supervisory authorities, in case they would acknowledge their existence.
The majority of OTC providers operate without identifying their customers. Multiple sources report on direct cooperation between dedicated Ponzi schemes or sanctioned brokers with OTC providers. Even if hard evidence such as an agreement or email exchange between confirmed parties is continuously being collected, blockchain based analytics continues to provide indications for illicit transactions.
Russia has been connected with an elevated amount of illicit activities for a country that has a population of 144 million, which is 1.5 times bigger than that of Germany.
“Russia has surprisingly large amounts of confirmed illicit “Unicorns” like BTC-e/WEX exchange, Hydra dark web marketplace, dozens of pyramid schemes like PRIZM, the largest ransomware attacks and other cybercrimes which experts consider to be possibly parts of state-sponsored-activities” – Oleksii Fisun, Co-founder of Global Ledger Protocol.
With so many confirmed illicit activities coming out of one jurisdiction, it remains worth investigating how profits from illegal activities could be potentially cashed out. As described extensively in the previous article, the advantage of a public blockchain is that it remains visible and traceable.
An example of such confirmed illicit activity that could be cashed out with a Russian OTC provider, would be funds allocated in a cryptocurrency wallet provider called Konvert.im. It includes more than 100 transactions and has more than 69% exposure to funds originating from newly sanctioned Hydra Darknet Marketplace.
As Konvert.im represents an exchange, most certainly, their compliance must be aware of the origination of those funds from sanctioned Hydra. It is within such schemes the funds might be mixed with other funds that could potentially be forwarded to OTC providers for cash out.
Regardless of the choice of the provider used for Blockchain based analytics, due to the nature of Blockchain based investigations that accumulate all of the funds and its traces on the Blockchain between different brokers, there will always be a certain exposure to illicit traffic, which most likely will be at a single digit percentage wise.
Similar to accepting a physical banknote at the local farmer’s market, there could be a possibility that this banknote was used to conduct illicit activity in the past. This connection to illicit activity remains invisible on the banknote itself, but such a transaction is perfectly visible on the Blockchain.
Having said that, it remains impossible to state that an exposure of 69% to Hydra has been a technical mistake. It should rather be perceived as a dedicated action and tracing the money from Konvert.im to a Russian OTC provider might serve as a symbol that this strategy can and might be adopted to circumvent SWIFT-based sanctions and easily bypass a limitation specified in the fifth EU sanction package.
I’ve specialised in the topics on the intersection between Information Systems, Fintech, Insurtech, Cryptocurrency, Blockchain – Distributed Ledger Technologies
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