Head of Russia’s Second Largest Bank: Mining Bitcoin is Just Another Form of Counterfeiting

Andrey Kostin is the head of VTB, Russia’s second-largest bank. Recently he was reported making a statement regarding crypto mining in which he compared crypto mining to counterfeiting. The statement was made during a speech to students who participated in an educational contest organized by Yandex, a Russian tech corporation.

He said:

“I am not a big fan of the crypto ruble. To me, this is a kind of counterfeiting. A person who is mining [cryptocurrencies] is similar to someone who is printing money. During the initial euphoria, everyone thought that everything can be paid in crypto starting tomorrow, but it hasn’t happened so far.”

Kostin shared his belief that cryptocurrencies are likely to remain a small niche in the global market. He based his opinion on the claims that the global financial industry is getting more and more transparent. He also boasted that because of this transparency, offshore holdings are gradually disappearing.

This argument is aimed at the transparency for which cryptocurrencies have been hailed as a revolutionary development. Being able to publicly verify transactions and holdings makes cryptocurrencies dramatically more transparent than how banks and other financial institutions have been so far.

What’s also interesting to note is that the board chairman of VTB, Olga Dergunova, does not share Kostin’s stance. Back in June 2018, Dergunova claimed that VTB was potentially ready to work with digital assets. She further assessed that they could be treated on an equal basis with fiat in the near future. A backdrop to this news story is the high demand of cryptocurrencies in Russia that the banks have not been able to keep up with due to the lack of clearly defined regulations.

This statement from Kostin comes after the Eurasian Economic Commission, which serves as an executive body of the Eurasian Economic Union, prepared a report on cryptocurrencies to promote regulations in the area. In relation to the report, the Commission’s minister for integration and macroeconomics, Tatyna Valovaya, said that EAEU aims to create a consolidated financial market by 2025. “We understand that the cryptocurrency phenomenon takes on such scales and volumes that it can sooner or later have an impact on macroeconomic stability,” she said.

Whether or not the cryptocurrencies will be able to make a real impact on the monopoly of banks in the global market is yet to be seen. What’s undeniable is the impact it has already made in forcing banks and financial institutions address the transparency issues in their policies so far.