The subject of virtual cryptocurrencies is not new for Russian
financial market. For a long time Russian authorities have been trying
to regulate, control and even prohibit the operation/circulation of
virtual money. Above all, the Russian bureaucracy sees such payment
systems as a convenient tool for money laundering or as a means of
financing of illegal extremist groups or other undesirable elements.
However, cryptocurrency has its opponents and advocates both among
general public and among state authorities in Russia.
Some insist that cryptocurrency is only an imitation of money,
quasi-money, because it never had any actual money equivalent from the
very start and because it is not "cashable". This is the main
distinctive feature of cryptocurrency as compared to existing virtual
money. Perhaps, feeling some changes in the air, in autumn 2015
WebMoney suggested to Russian Central Bank to become the one who would
issue future cryptocurrency. Qiwi, virtual payment service, made one
more step forward in this direction, having developed its own virtual
currency system and asked to make this system legal.
Interest to Russian national cryptocurrency would remain purely
academic if it were not for a serious crisis with WebMoney payment
system which happened in March this year and paralyzed mechanisms of
transferring electronic money equivalents into actual cash. No wonder
discussions about Russian cryptocurrency have gained new vigor and
enthusiasm. In this context, it is interesting to remember the infamous
proposal of Russian Ministry of Finance to send people to prison of the
use of any cryptocurrency.
Cryptocurrency A La Russe
According to Russian governmental financial monitoring agency
"Rosfinmonitoring" plans to issue Russian national cryptocurrency are
real more than ever. Because cryptocurrency indeed has many advantages:
- Cryptocurrency has open source code, which makes free mining
- Cryptocurrency is non-counterfeitable;
- Cryptocurrency is not subject to inflation;
- Cryptocurrency transfers are anonymous (though authorities in
Russia are not happy about it and plan to change it);
- De-centralization, or absence of a single digital bank center,
which makes cryptocurrency truly independent and beyond any control.
However, introduction of a new Russian national cryptocurrency may
easily lead to prohibition of circulation of all other virtual
currencies inside Russian Federation. To prohibit, cancel, ban and
forbid is indeed a favorite thing to do for Russian authorities these
days, who seek to get rid of anything they can’t control. In the
meantime, leading Russian banks are already discussing the possible
outcome of such prohibition...
The basic principles for Russian internal cryptocurrency were stated
- It should be possible to issue this cryptocurrency in the form of
- There must be an office of issue (legal entity, issuing securities,
currency notes, etc. in its own name and for its own business needs);
- The office of issue will have both rights and obligations;
- The office of issue shall obtain a license for this activity.
In spite of the fact that all world cryptocurrencies are issued in
limited amount, the Russian national "crypto" currency will be
different. Companies and individuals will be able to exchange roubles
or any other currencies into the cryptocurrency, that is, to buy it. In
order to do this they will use exchange services. Today such services
are popular as convenient tools for webmoney exchange into roubles or
into other virtual money. To be able to use this service a person will
have to undergo identification procedure obligatory today for all
existing payment platforms. In parallel with introduction of this
Russian national cryptocurrency, they plan to ban all other
cryptocurrencies. In 2015 a draft of "cryptocurrencies ban" legislation
was even posted in Internet.
Various members of financial market in Russia responded to this idea
in a different ways. Russian banks are indifferent to it because they
just don’t care about cryptocurrencies at all. They are far more
excited and interested in blockchain technology – the basis of
cryptocurrencies. They would love to use it. Implementation of
blockchain technology would make the storage of any information in
general much cheaper and money transfers will become cheaper. But do
Russians need their own national cryptocurrency? There is no consensus
among active owners of virtual wallets too. Yet numerous online stores
and web-shops depend on them, as they are the most active
online-shoppers. Entrepreneurs who also use virtual money for business
settlements are concerned with such plans - it is clear that
introduction of the Russian national cryptocurrency will inevitably
smash the existing system. And nobody can predict where it can lead to.
We would like to remind that currently Bitcoin is the most popular
cryptocurrency worldwide, with capitalization over three billion US
dollars. The second best is litecoin (one hundred million US dollars).
But in theory, anyone who wishes to do so is able to create a new
cryptocurrency, not only mine existing ones. So, it is quite possible
that Russia will join the ranks of cryptocurrency creators too.