The Russian government will continue to tread the subject of cryptocurrencies with caution, newly re-elected president Vladimir Putin said during his annual Q&A hotline session with the Russian public.
On Thursday’s live “Direct Line” session with president Putin, a citizen asked if Russia will have its own cryptocurrency and, if so, if it would be controlled by the government. Putin was also asked to offer his thoughts on cryptocurrencies’ disruptive potential to replace standard physical fiat cash.
In response, Putin said Russia cannot have a cryptocurrency since they “by definition” aren’t within the control of a state and are “beyond national borders”, he explained. While that explanation may fall short in the context of a central bank digital currency (CBDC), Putin admitted the “phenomenon” of cryptocurrencies is growing globally.
Cryptocurrencies as payment instruments have been adopted in Japan but “it doesn’t work in other countries” Putin said, highlighting the views of Russia’s own central bank on the subject.
"In most countries, cryptocurrency is not a means of settlement. The Central Bank of the Russian Federation believes that cryptocurrencies cannot be a means of payment, settlement or store of value. These currencies are not secured by anything."
The latest national ‘hotline’ was Putin’s 16th live Q&A session with a Russian public, a four-hour annual televised event with curated questions. Notably, it was the first session wherein the platform saw discussion surrounding cryptocurrencies and the sector’s expected regulations.
Putin even touched on cryptocurrency mining, stating it “is not regulated by us” but “we treat it very carefully”. An energy-intensive process, cryptocurrency mining sees blocks of validated transactions added to the blockchain wherein miners are rewarded with newly minted coins.
Avoiding Sanctions with Cryptocurrencies
As for its potential applications, Putin insisted that Russia should explore the possibility of using cryptocurrencies to “avoid restrictions in global finance and trade”, hinting at the possibility of using blockchain technology to avoid western financial sanctions led by the United States.
The Russian president’s remarks on the subject come within weeks of a Moscow meeting between Iranian and Russian officials discussing the usage of cryptocurrency for international trade.
“They [Russia], share our opinion,” Iran’s Parliamentary Commission of Economic Affairs chief Mohammad Reza Pourebrahimi said in May.
The Iranian official added:
"We said that if we manage to promote this work, then we will be the first countries that use cryptocurrency in the exchange of goods."
Russia, which has been rumored – the Kremlin denies this outright - to help Venezuela in creating the oil-backed cryptocurrency ‘Petro’, there have been numerous reports of Russia’s central bank actively researching the ‘cryptoruble’, a state cryptocurrency. Indeed, Putin’s own economic advisor Sergei Glazev suggested that a cryptocurrency would be a “useful tool” to circumvent international sanctions. “We can settle accounts with our counterparties all over the world with no regard for sanctions,” Glazev told Kremlin officials in January.
The State Duma (Russian Parliament), meanwhile, has seen three bills introduced to the legislative process in May. While the bill “on the distributed national mining”, notably included is the term ‘cryptoruble’ within the text, was rejected, the bill “on the digital financial assets” and the bill “on the digital rights” were both passed through the first round of hearings in May.
The entire 'Direct Line' session of 2018 can be found below:
Featured image from Shutterstock.