The Russian Ministry of Finance is not against a national cryptocurrency, provided the state does not participate in it. The creation of a centralized coin, like the cryptoruble, seems impossible, as cryptocurrencies are based on decentralized ledgers, Finance Minister Anton Siluanov told President Putin, according to Russian media.
Educating the President
Responding to Vladimir Putin’s request to study possibilities to emit а so-called “cryptoruble”, Minister Siluanov has tried to educate Russia’s head of state on the nature of cryptocurrencies. In a letter dated January 29, 2018, he says Minfin would not object to a private project to create a Russian cryptocurrency under the supervision of financial authorities, but only if the government did not invest in it.
In the document, acquired by Interfax, Siluanov states that emitting a centralized national cryptocurrency seems impossible, given the “technical features of such emission“. “Cryptocurrencies are based on decentralized ledger technologies”, the minister points out. His department remains lukewarm towards the idea of using state funds to finance the concept.
Anton Siluanov also notes that using distributed ledger technologies comes with some legal and technological limitations. In that respect, he mentions the relatively small number of transactions blockchains, like those of bitcoin and ethereum, can currently process.
“Attempts to use a national cryptocurrency to attract foreign investments would apparently have to deal with the need to exchange it for foreign currencies”, the minister says, pointing to recent reports of restrictions for Russian users on foreign exchanges. The trading of a Russian national cryptocurrency on international platforms may be limited in the future.
The letter also warns about the risks of using distributed ledgers for military purposes, as confidentiality is not guaranteed. Saying that, Anton Siluanov provides a strong argument against claims that blockchain transactions are completely anonymous and untraceable. Critics often insist they can be used for illicit purposes like money laundering and terrorism financing.
Cryptoruble – the Apple of Discord
Back in December, Siluanov’s deputy, Alexei Moiseev, said that the creation of cryptoruble seemed “impractical” to the Finance Ministry. The published letter is another proof of the fault lines that have emerged between his department and the Central Bank of Russia, which initially saw potential in the idea of a national cryptocurrency. The bank strongly opposed the legalization of decentralized cryptocurrencies, like bitcoin.
Last summer Centrobank revealed intentions to study the possibility to emit a “virtual national currency”, colloquially called “cryptoruble”. Later, in December, CBR’s Deputy President Olga Skorobogatova announced that Russia may start consultations with partners from the Eurasian Economic Union (EAEU) and BRICS on creating a common digital coin to be used by member-states in their interactions.
“The introduction of a national digital currency seems not entirely justified from the point of view of macroeconomics” she said, indicating a change in Centrobank’s position.
Do you agree with Russia’s Finance Minister that a centralized, government issued cryptocurrency makes no sense? Share your thoughts in the comments section below.
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