CryptoRuble is an alternative digital currency that is planned to be put into circulation on the territory of the Russian Federation. It is assumed that this will be a full-fledged means of payment in Russia with some of the advantages of cryptocurrency: open source, blockchain technology, and the absence of intermediaries.
The Digital Crypto Ruble Concept published in April 2021 by the Bank of Russia marked the start of a project to give the national currency a virtual form. It should be noted that the Central Bank has previously addressed the topic under consideration. The Russian financial regulator has already published an analytical note “Does central bank digital currencies have a future?” (2019) and the report for public consultations “Digital ruble” (2020).
National banks of the most countries are actively studying and implementing virtual national money. Thus, according to the technology analytical center Mindsmith, 127 (74%) banks out of 191 studied showed interest in blockchain technology. Leading credit institutions mentioned the distributed ledger in official publications 4408 times at the beginning of 2021. At the same time, more than half of the messages came from nine central banks. Among the leaders: the US Federal Reserve, the Bank of England, the European Central Bank, the Bank of Lithuania, the Bank of Portugal, the Bank of Thailand, the Central Bank of Tunisia, the German Federal Bank, and the Monetary Authority of Singapore. Collectively, the world’s central banks account for about 75% of global GDP.
These data indicate that leading financial regulators want to introduce advanced technologies in their national payment systems.
There are several goals pursued by the state by Russian cryptoruble emission:
- Controlling the indiscriminate issuance of cryptocurrencies. Crypto money is issued thanks to the work of many people and their computer technology. In Russia, it is planned to make this process regulated by the state.
- Centralization of the cryptocurrency network. In the case of BTC, LTC, ETH and other digital currencies, each network member is an important independent element. Only the state, and not all citizens of Russia, will support the operation of the cryptographic ruble network. The asset will lose the main advantage of cryptocurrencies – decentralization.
- Installation of taxation. Russian politicians note that miners receive income that they do not declare anywhere and do not pay taxes. Because of this factor, the budget does not receive millions or even billions of rubles. The digital ruble will eliminate attempts to obtain hidden income and increase the filling of the country’s budget at the expense of cryptocurrency users.
- Creating conditions for the voluntary refusal of people from other cryptocurrencies. Banning bitcoin or ether will not force people to abandon these assets. They are popular, expensive and promising. In the event that there is a cryptoruble that turns out to be a promising currency, a voluntary transition of the population of the Russian Federation to it is possible.
Pros and Cons Central Bank Cryptoruble:
The advantages of the digital ruble, like any cryptocurrency, include the absence of intermediaries in money transfers and a high level of protection.
The absence of intermediaries in cryptography will significantly save on money transfers: no bank fees, and payment systems will not take their 10-15% for the operation; everything will happen at the expense of users who participate in this system.
A high level of cryptographic protection will not allow attackers to influence the transaction and get other people’s money.
The main disadvantage of the cryptoruble is state regulation. The issue of regulating the circulation of cryptocurrency is very acute. Government regulators understand that uncontrolled payments help to evade taxes, finance terrorism and launder illegal proceeds.
It is also important to note that the concept of a cryptoruble does not have a model for the functioning of anonymous wallets. Wallets will be opened on a platform created by the Central Bank and under its control.
The need to link the wallet to a specific person (legal or natural) means that the Central Bank delegates the control function to commercial banks and gives commercial banks responsibility for identifying persons.