Business

Erik Gibbs

Russia’s central bank backs a state-issued cryptocurrency

There is a lot of confusing information coming out of Russia regarding how it is going to view cryptocurrencies going forward. There have been reports that crypto would be completely regulated, reports that it would be completely banned, reports that the country is preparing to switch from fiat to digital currency and virtually everything in between. Whether the flow of information is meant to distract from real goals isn’t able to be determined right now, but there is another report that is beginning to make its rounds. Russia’s central bank is reportedly getting behind the idea of a gold-backed digital currency.

Elvira Nabiullina, the head of the Bank of Russia, was speaking before Russia’s Duma this week when the subject of cross-border finances came up. She responded to a question from a lawmaker with the Duma’s financial markets committee by stating that the central bank would not be against implementing a state- and gold-backed crypto solution. She added that it would be within the framework of international settlement policies established between Russia and other countries, but believes that the best solution is still with fiat.

Explained Nabiullina, “As far as settlements are concerned, we will consider your suggestion regarding what a cryptocurrency backed by gold would look like [in this setup]. In my view, however, it is still more important to develop settlements in national (fiat) currencies.”

There is reportedly already a digital currency option in the works, the “cryptoruble.” It is a stablecoin that is expected to be launched later this year but, as the world has seen with all of Russia’s crypto policies, whether or not it will come to be realized can only be speculated at this point.

Just because the central bank would be willing to produce a gold-backed crypto solution doesn’t mean that the country is ready to move forward. Nebiullina told the Duma, “We don’t see a possibility for cryptocurrency to fulfil the role of a money surrogate… and are practically not considering it within the context of the regulatory sandbox.” That statement is another reason the cryptoruble’s future is questionable.

There have been rumors that Russia is looking for ways to circumvent US-led sanctions, and that crypto is one of the options. The country’s government has denied the rumors, but, with the amount of see-saw information being presented, anything is possible at this point.

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