Russia May Introduce a National Cryptocurrency

28.05.2016

According to Kommersant, a Russian news outlet, local officials are discussing introduction of a national cryptocurrency. The idea circulates across the Ministry of finance and the Central Bank, with some representatives of private banks involved.

The publication references Pavel Livadny, secretary of state and deputy director of Rosfinmonitoring, as its source.

It is assumed that the cryptocurrency’s issuance and exchange procedures will be regulated, issuers licensed, and anonymity minimized. The idea’s originators believe such approach would safeguard the project from being used in illicit schemes, protect law-obedient consumers, and cut transaction costs.

Companies and individuals will be able to exchange rubles or another fiat currency at dedicated electronic platforms. It would involve mandatory user identification, so there will be no trace of anonymity.

At the same time, Kommersant notes, such ideas will cut Russia off the world’s most advanced technological developments.

No draft law is currently on the table, however, the publication suggests that should such cryptocurrency be introduced, any other digital currency will be completely banned.

Opinions of various market players in this regard are diverse. Banks are not very interested in the idea of cryptocurrency as it is, however, blockchain technology is a different matter.

â€śIt is a technology that enables recording operations in chains of blocks thanks to a great computational power scattered around the world. Theoretically, it’s possible to forge a block, but it would involve forging all subsequent blocks, which would require computational capacity impossible nowadays. Cryptocurrencies like bitcoin are means of payment based on blockchain. Apart from creating cryptocurrencies, blockchain may be employed in banking, medical services, insurance, and elsewhere, if trusted transactions between network participants are required,â€ť says Stanislav Protasov, co-founder and senior VP for development at Acronis.

However, Vladimir Urbanski, head of e-business at Alpha Bank, says that current regulation framework does not allow using blockchain technology for financial transactions.

â€śHad introduction of a cryptocurrency allowed introducing blockchain technology for financial operations, it would have significantly cut data storage cost,â€ť he said.

Last autumn, payments processor WebMoney had offered Russia’s Central Bank to act as a cryptocurrency issuer. Another payments processor, QIWI, has engaged in development of its own digital currency, BitRuble.

This April, Olga Skorobogatova, deputy chairwoman at the Bank of Russia, stated that national digital currency was an option.

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