Russia’s FSB Is Making Life Harder for Blockchain Companies

  • Enterprise blockchain solutions in Russia have to get their cryptographic elements certification with the FSB, the counter-espionage agency
  • The process can take several years to complete and up to $100,000
  • Some foreign-developed blockchains can’t satisfy the requirement without a fork
  • Russian-made systems might end up isolated from the global market due to distrust of Russian government cryptography standards

Blockchain technology was created to be borderless. But in the real world, borders still impose limits on this technology.

Everything related to cryptography in Russia falls under the supervision of the Federal Security Service, or FSB, which is the successor to the KGB. The FSB has a certification process for blockchain companies, which might cost over $100,000 and take more than a year, according to experts on the Russian enterprise blockchain market.

Last year, the Fintech Association, a consortium helmed by the Bank of Russia, reported obtaining the certification for Masterchain, its blockchain for banks. The process took about three years to complete, and it’s still not the end of story.

Read more: ‘Disappointed’ by Central Bank Blockchain, Russia’s Largest Bank Eyes Alternatives

The Fintech Association is working on getting another certificate from the FSB, this time for a particular product on Masterchain. Going forward, any new iteration and implementation of the code using cryptographic elements needs to go through this process.

Other Russian enterprise blockchain projects, including Waves and Bitfury’s Exonum, are still working on getting certified as well – and they also may need more than a year.

The FSB’s certification process is challenging the borderless feature of blockchain technology in two ways. Globally, Russia is trying to get the cryptographic community to accept its encryption algorithm as a standard. Inside the country, the blockchain industry is trying to figure out what to do with a product that foreign partners…

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