Russian news agency Tass has reported that the Russian Central Bank is exploring the possibility of launching their own cryptocurrency. The Chairperson of Russian Central Bank Elvira Nabiullina, while talking to a student conference hinted that the bank is looking to develop and launch its digital currency sometime in the future. She made it clear that the project would not be implemented immediately. She said at the conference:
Indeed, the Central Bank Digital Currency cannot be realized immediately, however many central banks, including the Russian Central Bank, are exploring this possibility.
She showed concerns about the reliability of the technology, saying that for the project to move forward the technology should be reliable and continuous. She iterated that the distributed ledger system and the technology behind the Central Bank Digital Currency (CBDC) should be mature enough to be implemented. She stated:
If we are talking about the national currency, which works as a whole in the country, that is, these are not private assets, of course, this requires that the technology allows ensuring reliability and continuity. Technologies must be mature, including distributed registry technologies.
Nabiullina also argued that cash is still very much relevant in some parts of the world. Sure, some countries have become cashless for reasons such as privacy and anonymity but cash is still relevant in some countries, and to make sure that the CBDC doesn’t cause any unwanted disruptions, it is to be made sure that the people don’t rely much on cash. She also said that banks look into the advantage of digital currencies over traditional banking technologies, such as fast bank payments. She said in the conference:
“If we look, some countries have become almost non-cash, but in many countries, cash is still in great demand. It’s not so much because people want to perform some dubious operations. People often value their privacy, anonymity. Of course, the spread of non-anonymous Digital currencies are in some sense the readiness of society.”
Russia’s Stance Softened up on Crypto:
Russian officials have been vocal opponents of cryptocurrencies in general. The government has criticized cryptocurrencies at multiple forums and have introduced draft bills banning cryptocurrencies multiple times. The rationale of the government is that these digital assets are used by criminals and the wealthy to launder money out of Russia. The Russian Finance Minister in a statement last year called out for a ban of all cryptocurrencies because he believed only the government had the right to issue and regulate currency. He in a statement during Vnesheconombank‘s conference:
This [Ban] is necessary to protect Ruble as the single legal means of payment in Russia
The President of Russia also gave clear instructions to the Russian Duma, the Lower House of the Parliament, to have crypto regulations ready by July 2019. In an official document posted on the Russian President’s Official website, Putin calls for the creation of:
“…federal laws aimed at the development of the digital economy, including determining the procedure for conducting civil law transactions in electronic form, as well as regulating digital financial assets and attracting financial resources using digital technologies”.
However, the interest of the Russian government seems to have shifted recently as it has now started to embrace blockchain. Many new projects are being launched by the Russian government involving blockchain. Quite recently, the Siberian region of Khanty-Mansi announced they were developing a blockchain-based tourism platform.
The project aims to transform the remote area in western Siberia into a tourist destination and bring in foreign direct investment to uplift the inhabitants of the area. The project will start by testing these digital technologies in a pilot area before going mainstream. The Russian authorities also recently teamed up with TradeLens to introduce their new supply chain platform in St. Petersburg.
Russian Prime Minister Dmitry Medvedev while in his address at the St. Petersburg Youth Union of Political Entrepreneurs last month also hinted at the fact that the country is having second thoughts on the legislation. In his speech, he iterated that the Russian cabinet has agreed that there’s no need for regulations as cryptocurrency have lost their popularity and are no longer a threat. The chairman of the cabinet also confirmed the news, saying:
“New regulations in this area will help settle judicial protection against abuse… especially important in the fight against the legalization of proceeds from crime. On the other hand, the attempt to regulate everything in the digital sphere is counterproductive and unreal, because the world is changing very quickly and you need to have flexible legislation.”