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Russia Won’t See Bitcoin as Currency, Says Central Bank Chief

Last Updated March 4, 2021 4:56 PM
Samburaj Das
Last Updated March 4, 2021 4:56 PM

The head of the Central Bank of Russia has stated that bitcoin will not be considered a currency, amid plans toward regulating it as a ‘digital asset’.

Elvira Nabiullina, the governor of the Central Bank of Russia, has confirmed that the authority is looking into the possibility of regulating bitcoin. Earlier in April, Russia’s deputy finance minister Alexei Moiseev – having led the effort to ban and criminalize bitcoin activity in years past – claimed that the Russian state is now looking at monitoring bitcoin transactions. Such a move would require regulating the industry, with legislations drafted to this effect.

Toward the end of May, the central bank’s deputy chairwoman Olga Skorobogatova addressed the subject during a meeting in the Russian Parliament. She pointedly referred to bitcoin as a “digital commodity” which, along with other digital currencies circulating in Russia, would be subjected to regulations in taxes, monitoring and reporting.

Now, the central bank’s governor has revealed that the authority is “analyzing” the possibility of regulating the cryptocurrency, in an interview with CNBC .

Not a Currency?

Before regulation, Nabiullina said that the central bank would first research and learn about the cryptocurrency, pointing to a need to “understand more about this internalization of bitcoin and our regulatory systems.”

Still, she sees doubts and “risks” associated with digital currencies, or rather, digital assets.

“We have some doubts, we don’t see some huge benefits from introducing digital assets in our economy,” she told CNBC.

Markedly, she added:

We don’t consider that bitcoin can be considered as a virtual currency. It’s more digital assets with the regulation of assets.

Bitcoin Payments as a Currency are Coming

Russia’s central bank has some history in denying bitcoin to play the role of a currency. Earlier in February, the central bank blocked Ulmart, the largest e-retailer in the country, from accepting bitcoin as payments.

Ulmart chairman Dmitry Kostygin revealed in an interview:

We saw that there was demand [for bitcoin payments] from some of our customers and so we were considering that seriously. But then, as the central bank intervened, we wouldn’t lose our time [with the feature].

Ulmart – essentially the Russian counterpart of Amazon – has since brushed aside concerns and has publicly announced the retailer’s plan to accept bitcoin as a method of payment alongside the fiat ruble from September 2017.

Blockchain Trials

For Nabiullina, there is far more of an appeal for the central bank in looking into blockchain technology.

“I think it’s more important to understand (the) benefits of new technologies … like blockchain which is on the basis of bitcoin,” she stated.

Having established a working group to explore blockchain technology in early 2016, Russia’s central bank has since tested transactions on an Ethereum-based interbank blockchain prototype dubbed Masterchain.

Earlier in May, an early draft of Russia’s digital economy program revealed plans toward regulating the blockchain industry in 2019. They may have to do so sooner, going by the predictions of the Herman Gref who is the chief executive of Russia’s largest bank, Sberbank. Gref, notably a bitcoin advocate and bitcoiner himself, sees blockchain technology to see commercial applications in Russia in 2019.

Featured images from Shutterstock.