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Russia Is Considering Its Own Cryptocurrency

Last Updated March 4, 2021 4:48 PM
Samburaj Das
Last Updated March 4, 2021 4:48 PM

The Russian Ministry of Finance, known for its disdain and intent to criminalize bitcoin activity, is considering the issuance of a state-controlled cryptocurrency in discussions with banks and regulators.

The idea of a state-controlled cryptocurrency in Russia is currently being deliberated in meetings between the Russian Ministry of Finance, the Central Bank of Russia and representatives from other banks.

Paul Livadniy, deputy director of the Federal Financial Monitoring Service in Russia, also known as Rosfinmonitoring, revealed that while no draft laws for a state-issued cryptocurrency are being devised yet, discussions are currently ongoing. Livadniy was speaking to Russian publication Kommersant , where he made the revelation.

Guidelines for a Russian Cryptocurrency

According to Livadniy, the cryptocurrency will have to follow certain guidelines, including the most notable one of being issued by a central entity, unlike Bitcoin. They are likely to be financial institutions, the publication’s report revealed, those which “will be entrusted with the emission (development and release) of the cryptocurrency.

The very issuance of such a cryptocurrency would require a license, presumably bestowed by Rosfinmonitoring. Furthermore, any exchange platforms that see rubles or any currency swapped for cryptocurrencies will be regulated by rules. This is to specifically “minimize the anonymous transfers”, a practice which Rosfinmonitoring associates with illegal activities such as money laundering and terrorism financing.

Furthermore, the report notes that it is likely that Russia will outlaw all other cryptocurrencies, if it were to issue its own state-controlled centralized currency.

The creation of a state-controlled cryptocurrency in Russia was previously broached by Olga Skorbogatova, the deputy chairman of the Bank of Russia, the country’s central bank. In remarks from April 2016, she claimed that a combination of features from public and private blockchains would be used to create a national digital currency. She stated:

With the rules of a hybrid network (both public and private systems to create a distributed ledger, a national digital currency is most likely [to occur].

As things stand, a draft bill by the Ministry of Finance calling for the ban and criminalization of bitcoin is being presented to the State Duma, the lower chamber of the Russian Parliament. The bill will be entered into the Duma, despite disagreement from the Russian Ministry of Justice. The bill calls for imprisonment of up to 7 years for bitcoin usage or mining, along with massive fines.

Featured image of the Russian Finance Ministry from Shutterstock.