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Russia’s Central Bank Establishes Blockchain Working Group

Last Updated March 4, 2021 4:47 PM
Samburaj Das
Last Updated March 4, 2021 4:47 PM

While Russian authorities and regulators take a notoriously hardline stance against Bitcoin, the country’s central bank has announced the establishment of a ‘working group’ that will seek to study distributed ledger or blockchain technology, the same underlying technology that powers Bitcoin.

In a confirmed nod toward showing favorability toward blockchain technology and new financial technologies (Fintech), The Bank of Russia (Russia’s central bank) has revealed the creation of a working group to evaluate the applications of blockchain technology.

The Bank of Russia made the revelation in a press release yesterday. The announcement, translated from Russian, read:

[T]he Central Bank established the Working Group on the analysis of advanced technologies and innovations in the financial market. Among the priority issues – the study of distributed ledger technologies (eg: blockchain), as well as new developments in mobile [technology], payment [industry] and other areas.

The Working Group will schedule regular meetings that will be attended by representatives of banks, financial market leaders and participants as well as self-regulating organizations that will convene to discuss the different aspects of the application and use of blockchain technology and Fintech.

Deputy Chairman of the Bank of Russia, Olga Skorobogatova who leads the group stated:

The development of modern financial market is inseparable from the development of financial technology. Financial services quickly digitize new business models, ecosystems and market participants [to] change the behavior of consumers of digital services.

The working group will also help in charting out a set of guidelines for a regulator who, predictably, will look over the ways in which blockchain technology will be put in practice.

“High-tech financial markets need a high-tech regulator, which must also thoroughly understand the new financial processes and technologies and their possible application in practice,” Skorobogatov added.

Banking’s Blockchain Binge

Russia’s central bank joins the blockchain bandwagon in the months after Sberbank, Russia’s largest bank by assets, also revealed its intention to join the private banking blockchain consortium led by New York-based R3, toward the end of 2015.

The bank’s first deputy chairman, Leve Khasis, spoke about the Sberbank’s intention to adopt “protocols standards and technologies” developed by R3, as soon as they are implemented.

Despite the newfound interest in blockchain technology, Khasis also stated that the bank had no intention to facilitate Bitcoin or any cryptocurrency as a mode of payment, due to the regulations imposed by the Russian central bank.

He stated:

As far as I know, the position of the regulator (the Bank of Russia) has not changed and it has a negative take on cryptocurrencies. However, blockchain may be used by us for internal settlements such as transactions between our subsidiaries and other banks.

 Could the Central Bank Legalize Bitcoin in 2016?

More recently, however, the Deputy Chairman of the Duma –the lower house of the Russian legislature — spoke directly about the possibility of the Russian central bank legalizing Bitcoin. The very notion of doing so, he revealed, comes after discussions and meetings between businesses and fiscal authorities so far in 2016.

In the beginning of 2016, after a series of meetings with the fiscal authorities and businesses, it was stated that in the future, the Central Bank could begin to legalize and regulate certain transactions with Bitcoin, particularly peer-to-peer transactions and settlements with individuals.

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