Russian media recently revealed plans of creation a national cryptocurrency to be used alongside the ruble, so the Federal Financial Monitoring Service’s promulgated it on TV stations and newspapers.
Pavel Livadny, the deputy Director of Rosfinmonitoring, hopes that this new cryptocurrency will be more convenient for Russians and will help to reduce the transaction costs. At the same time, Rosfinmonitoring plans to ban all other cryptocurrencies as well as Bitcoin in the country. He mentioned that they have already begun talks with The Finance Ministry and the Central Bank who will be the main stakeholders in the future cryptocurrency. Analyzing this plan for the Russian cryptocurrency it is clear that it will have a central issuer in control over the currency’s supply, which is quite differ from Bitcoin.
This news comes at a time of impressively steady growth in the trading volume between bitcoins and rubles on the unregulated LocalBitcoins platform, where volumes have nearly tripled this year, making record peak actually every week. Yesterday for example, volume of 27.8 million rubles or $421,000 is over five times what it was a year ago, and a hundred times higher than 2014.
While LocalBitcoins is just one exchange available to Russians, it has a stringent policy of not reporting information to state and taxing authorities. So it’s become the most pops among fears of legal status of Bitcoin in Russia. Moreover, this exchange can be used anonymously, since users can make agreement of face to face trade using unverified accounts. The Rosfinmonitoring plan to license exchanges, using some kind of national identification to minimize anonymous transfers. And then Russians would be able to trade national currencies for the new cryptocurrency.
Russia will not be the first country who try to monopolize their electronic currency, but Russia will be the first country who use cryptocurrency as an electronic version of existing national legal tender. In addition, cryptocurrencies units are cryptographically secured and proven to be unique, wich make them quite differ from traditional ecommerce currencies. Ecuador, sa an example, was the first country who create a national e-currency, and also banned cryptocurrencies and other digital currencies within their borders. Ecuador attached the output of their currency to the US dollar for stability and protection from debasement.
The goal of the Russian cryptocurrencies ban seems to be evident, but there is a some dispute between president Putin and other Russian leaders. Putin said that Russia’s central bank has taken a reasonable position so far on cryptocurrency technology, focusing on exploring its applications. He mentioned last July in a statement to the press, that Bitcoin is backed by nothing, and this is the major problem. While he states the use of cryptocurrency as money may be problematic, he also claims that the technology holds promise.
“We do not reject anything, but there are serious, really fundamental issues related to its wider usage, at least, today. However as an accounting unit, these ‘coins’ or whatever are they called, they can be used, and their adoption becomes wider and wider. As some kind of unit in some account, probably, it’s possible.”
This bill then, in January, will make cryptocurrencies in the same category as money surrogates, which are already illegal. If it finally passes, it will use fines as a staying for using and owning cryptocurrencies. For making effective most uses of cryptocurrencies illegal, so this bill range administrative penalties from 20,000 rubles to a maximum of 5 million, and also calls for confiscation of all items responsible for the breach, such as mining equipment and the coins themselves. It is still not known if this is the bill should the new national cryptocurrency be issued.