Real-life limits

While ICOs are happening with increasing frequency, levels of knowledge about cryptocurrencies are very low.

“There are between 10,000 and 20,000 people who more or less know about cryptocurrencies in Russia,” says Smerkis. “And when the economy is very small, the volatility is very high.”

Some of the attempts to integrate bitcoin into Russia’s everyday financial infrastructure have met with failure. The country’s first bitcoin exchange point opened on central Moscow’s New Arbat Street last year, but shut-down with – in four months because of a lack of demand. The exchange charged customers 4 percent commission during the day and 10 percent commission at night to convert bitcoin into rubles.

“People are scared and would prefer to work online,” says a representative of the now-defunct exchange office, who declined to give his name because of fears about the legality of the operation. The representative added that he would be ready to open another such exchange point if regulatory conditions improved.

“If there are a green light and new laws then maybe we will try to open one again,” he says. “Cryptocurrencies are becoming mainstream.”

A representative of another bitcoin exchange point in Moscow that opened last year —and was reported as the country’s second such outlet —did not respond to repeated calls from The Moscow Times.

Bubble fears

Cryptocurrency critics suggest that strong demand is in dan – ger of overheating the market and warn of a possible crash. According to Skolkovo’s Novikov, interest in ICOs is “inflating too quickly.”

“At the moment it’s a pure bubble,” says Chronopay’s Vrublevsky. “But when they are able to use cryptocurrencies to invest in the real economy, [things] will have reached the next stage.”

Nearly $250 million has been put into ICOs across the world, according to Smith+Crown, a cryptocurrency research firm. Most of this sum, $107 million, was raised in 2017.

While the value of most leading cryptocurrencies has risen through their trading life spans, the increase has also been accompanied by occasional sharp price falls and violent volatility on exchanges.

Russian Central Bank Governor Nabiullina has warned of the “many risks” of using bitcoin. Many ordinary Russians still remember the substantial losses they incurred from feverish investment in pyramid schemes that flourished in the 1990s

Naibullina’s point is taken up by Novikov, who suggests that any rapid move towards legalization of crypto-currencies in Russia could spark even more interest in ICOs and stoke a buying frenzy.

There will be “sad consequences,” if that happens, he says: “It would be like taking someone with a temperature to the sauna.”