What do Russia and cryptocurrencies have in common? Both are being scrutinized very closely by the international business; both are mostly misunderstood and feared by many, yet both offer terrific entrepreneurial opportunities in the long run, once appraised and regulated. In the meantime, as the flight of fiat capital from the country continues, the moneyed Russian showbiz stars are figuring out the means to secure, preserve, and multiply their at times ill-gotten but vast fortunes while remaining in the country. Ironically, many think crypto is the way.
As Sheldon Cooper would put it, it is an accepted convention by statisticians of almost all walks of social science that over the past 13 years, about 20 thousand dollar millionaires and billionaires have left Russia. 6,000 in the last three years, according to the research by Knight Frank, one of the leading international consulting companies specializing in serving the super-rich of the world.
Among the reasons are state interference in the business environment and inconsistent local legislation. In recent years, the anti-Western sentiments of the authorities and the so-called de-Offshorization Act have been dubbed “the last straw” by the Russian “job creators.”
The whales of showbiz in Russia were, and still are, among those who desperately try to maintain a “live and let live” relationship with the Russian state apparatus. Most deals between performers and impresarios in Russia are still “bathhouse-based,” just as they were in the 90s: a tour contract or a film agreement is signed only when suitcases of cash change hands at a plush establishment, with lots of witnesses and bodyguards. However, what to do with those suitcases after the hand-slap and a “na zdorovije!” toast is still debatable.
The Russians’ financial activity abroad has been felt for a long time. One of the latest examples is that, for four months in 2017, the number of feelers for real estate purchases in London increased by 30% (compared to the same period last year), Knight Frank reported in May. It’s the Russians, of course! Predominantly (in 60% of cases), Russian citizens are looking for an apartment for themselves, their families, or children, the budget is 1.5-5 million sterling, but recently, more and more inquiries are made as to whether or not a seller will accept crypto.
Perhaps, there are fairly trivial forces at play here than the hunch or Zeitgeist. The crypto market is exploding with possibilities lately, but the consensus is that it’s about to be whittled down to a few well-hedged, trusted entities that will constitute the future world supply of the cryptocurrency. In the meantime, a hefty digital purse full of well-managed tokens is a modern means of portfolio diversification and value storage.
Besides, the sagacious Russians, like no other business people in the world, know the meaning of “asset restrictions” or “capital control.” Twenty-five years ago, virtually every one of those enterprising devils, who in time became filthy rich, was most of all concerned with precisely those issues (well, not catching a racketeer bullet was a factor, of course, but that came a bit later). Expanding their asset base and capitalizing on it with as few restrictions as possible was key. But the deviousness of the communist state in deterring its citizens from such “rotten Western practices as doing business” was so integral and, frankly, scary, that every today’s 50-year-old millionaire in Russia looks over both shoulders before making a move. Therefore, the Russian business’s answer to political instability (in many cases, that is, “persecution”) and less than fair treatment by the state was always “innovative practices” (that is, “creative accounting”). As you can probably tell by now, cryptocurrency use is hands down the most innovative practice of them all.
Buying real estate with crypto is no longer an exotic feat, says a West End realtor to the Russian stars who asked to remain anonymous. In general, the Russian pop stars whose names will tell the Western public nothing but will make any Russian female shriek in exaltation are interested in elite small apartment houses or condos located near parks and green areas. Here, they can walk among the indifferent to their fame Londoners freely, unrecognized and rid of the unwanted attention they invariably warrant at home.
Another 30% of inquiries are related to investments in residential and commercial real estate. As a rule, Russian stars are looking for apartments, retail space in the central streets, and a ready business. The reason is that the Royalty Law, copyright infringement legislation, and all the other legalities of the show business in Russia have never been enforceable laws and remain virtually non-existent. In other words, authoring a smash-hit today by no means equals your grandchildren’s financial well-being tomorrow. That which in Hollywood is a mere backup plan for a Russian pop idol may mean physical survival and a steady pension.
In these conditions, the newest coins protected by encryption and specializing in creating transactional anonymity in such universally coveted realms as real estate are a great catch. As is so often the case, for better or worse, technology is outpacing the regulators. Making as solid an investment as a West End piece of property, at least some people in the market won’t care to consolidate into the best-known and most heavily scrutinized coins. In the worst case, you’ll still have your title deed.
