President Putin had earlier requested his finance ministry to study the possibilities of emitting a cryptoruble. However, the ministry’s minister Siluanov has decided to educate the president on how cryptocurrencies work. In his letter, Siluanov said he would support the creation of a Russian Cryptocurrency supervised by financial authorities but not the government.
Silianov went on to state that emitting a centralized national digital currency looked impossible because of the technical features of such emission. This is mainly because cryptocurrencies operate on decentralized technologies. The finance ministry has remained undecided on the idea of using state funds to finance the project.
The minister also added that using distributed ledger technology comes with many technological and legal limitations. In his statement: “Attempts to use national digital currency to lure foreign investment would be forced to deal the need to change it for the foreign currencies.” He noted that because the Russian government was already working on restrictions for Russians on foreign exchanges. Due to that, the Russian national digital currency on the international platform may face resistance in the future.
In the letter, the minister also warns about using distributed ledgers for military purposes because confidentiality is not assured. Siluanov’s argument on this is that blockchain transactions are anonymous and more in that they are not traceable. There have been arguments that they can also be used for illicit purposes like money laundering and the financing of criminal activities.
The ministry does not seem to like the idea of Cryptoruble because in December 2017 Alexei Moiseev who is the deputy to Siluanov said that creating cryptoruble was impractical for the Finance ministry. This seems to be creating a rift with Russia’s central bank which had seen potential in the idea of a national cryptocurrency. The bank has particularly been against the legalization of other digital currencies like Bitcoin.
The CRD’s Deputy President Olga Skorobagatova was likely to begin consultations with several partners from Eurasian Economic Union and also from BRICS of the creation of a common coin to be used by all the member states in their interaction.