FX.co ★ Russia revamps stance on cryptocurrency

A cryptocurrency has gone through a thorny path from a strong denial by major central banks to its recognition as a would-be legal payment tender. The Bank of Russia was not so prompt to follow suit. Eventually, the Russian regulator also announced its intention of digitizing its national currency.

A couple of years ago, the Kremlin used to label cryptocurrencies as unreasonably risky assets. This year, the Bank of Russia is ready to respond in a timely manner to the population’s request for a rapid, convenient, and secure payment means based on advanced technologies. It goes without saying that the digital ruble will not be introduced as a monetary unit of the Russian Federation. In practice, it will integrate all features of crypto technologies. The digital ruble will be issued by the Bank of Russia and launched as a legal payment tender alongside cash and non-cash transactions. Like any cryptocurrency, technically the digital ruble will represent a unique digital code that is stored in an e-wallet. This innovation is expected to reduce transaction costs, simplify access to financial services, and broaden opportunities to use and develop new financial services and instruments.

On July 31, President Vladimir Putin signed the new cryptocurrency law which will go into effect in January 2021. The law clears up the official stance on cryptocurrencies and their use within Russia’s borders. As the hardline Russian authorities have not been able to ban blockchain technology, they find it appropriate to impose strict controls on it. Unwilling to admit its defeat in the battle with technological progress, the Kremlin decided to digitize the national currency.