Home / News / Crypto / News / Russia’s Digital Ruble vs Chinese Digital Yuan: How can Russians do it Different?
5 min read

Russia’s Digital Ruble vs Chinese Digital Yuan: How can Russians do it Different?

Published April 9, 2024 12:20 PM
Shraddha Sharma
Published April 9, 2024 12:20 PM

Key Takeaways

  • Russia aims to differentiate its digital ruble from China’s digital yuan.
  • Russia seems to be focusing on international trade flexibility and avoiding the integration of social credit systems.
  • According to the Atlantic Council, e-CNY is the largest CBDC pilot globally.

With the emergence of Central Bank Digital Currencies (CBDCs), China’s e-CNY took center stage but Russia is not exactly following in its footsteps. Andrei Konstantinovich, head of the State Duma Working Group on Cryptocurrency Regulation, told a Russian paper  how the digital ruble is being positioned with international trade sanctions, legislative hurdles, and societal implications.

Strategic Planning of Russia’s Digital Ruble

Russia has been wrestling with the integration of the digital ruble into its economy, leveraging it to sidestep international sanctions.

According to Konstantinovich’s translated conversation with a daily,Russia is moving away from social rankings in the development of its digital ruble. On a question about learning on experiences of China, the official said, “Creating a rating or database for a specific task is a separate storу, but I do not support general ranking.”

Further adding that certain types of targeted ratings or databases might be beneficial for specific applications. However, the official does not support the idea of a general, all-encompassing social ranking system akin to what is being developed in China. China has been accused of using the framework for surveillance.

The statement might suggest that while Russia is exploring the possibilities of digital currencies and technologies, it is also wary of the societal implications and extensive control mechanisms. The strategy could reflect Russia’s intent to foster a digital economy that supports international commerce without social surveillance mechanisms.

According  to the Atlantic Council, China’s digital yuan (e-CNY) is the largest CBDC pilot globally. Its adoption reached 260 million wallets spread across 25 cities. As per the platform, the initiative has seen diverse applications across sectors, and even in the purchase of crude oil. Meanwhile, China recently moved focus on integrating digital yuan for overseas tourists and cross-border applications.

Russia has also reached an advanced stage of the pilot as per the Atlantic Council. The country’s focus on wholesale, cross-border applications comes from the motivation to lessen its economy’s reliance on the US dollar amid sanctions.

Konstantinovich said, “It is right that tools are emerging that make it possible to prevent US hegemonу in the global financial sуstem.”

The official also commended the Bank of Russia for its efforts in developing the digital ruble. The public use of the ruble is expected to begin in 2025 as per the head of the State Duma Working Group. He believes that the introduction of the digital ruble positions Russia as a frontrunner in international payments.

Russia Plans to Regulate Crypto, Starting With Mining

Unlike China, Russia is not talking about a crypto trading or mining ban. According to Konstantinovich, the cryptocurrency market has many components, and extensive research is required to consider their integration into the Russian economy.

The official said, “We have already held 10 meetings with representatives of the banking sector, the energy industry, as well as the crypto industry and the scientific community. With them, we tried to discuss in as much detail as possible all possible aspects of this area and ways of legalizing it.”

Konstantinovich outlines a cautious and phased approach to cryptocurrency regulation. He acknowledges the suggestions from experts about updating laws to define different types of cryptocurrencies, including stablecoins. However, he advocates for a step-by-step process to first implement and assess the effectiveness of initial regulatory measures before proceeding to more complex adjustments.

He said, “The first step in regulation should be mining. Here we are talking mainly about Bitcoin mining.”

The official further added, “Regulation of so-called altcoins and their various variations will come later. As anti-moneу laundering and anti-terrorist financing rules are imposed on the crуptocurrencу sector, confidential coins will most likely be prohibited, since their use for criminal purposes is very high.”

Russia Differs From China’s Implementation

Like China, Russia wants widespread adoption of the digital ruble. For Russia, the digital ruble is not just a technological advancement but a geopolitical tool for Russian autonomy in global finance in the face of sanctions. The digital yuan serves as an extension of China’s domestic policies within its social credit framework.

As the digital ruble progresses towards its planned mass introduction in 2025, it will regulate different aspects of the crypto market.

Was this Article helpful? Yes No