Russia Is Working on ‘Cryptoruble’ to Circumvent Western Sanctions

Russia’s stand over cryptocurrencies has remained whimsical for a long time. The Russian government and its finance ministry have shared contrasting opinions several times in the last year. However, this time it looks that President Putin is quite confident of giving Russia its own state-owned cryptocurrency ‘cryptoruble’.

Vladimir Putin has ordered Moscow officials to begin work on this as a measure to evade the western sanctions. The Financial Times has reported saying Putin “has commissioned work on establishing a cryptocurrency.”

Russia economic advisor to Putin, Sergey Glazyev in a recent government meeting told the officials that “a cryptorouble would be a useful tool to get around international sanctions.” He further stated that “This instrument [cryptoruble] suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counterparties all over the world with no regard for sanctions.”

Glazyev also said that the new digital currency would be same as ruble and its circulation would be restricted in certain ways such that it would allow Kremlin to track its every move. Also, there will be no mining possible for the cryptoruble and can be issued only by the central bank.

However, note that this is not for the first time we are hearing about cryptoruble. Back in October 2017, Russian communications minister Nikolai Nikiforov put a proposal to President Putin to have the country’s own cryptocurrency. At that time, Nikiforov said that the cryptoruble will be developed and issues “quickly”. The minister said, “I so confidently declare that we will launch the cryptoruble for one simple reason: if we do not, our neighbours in the Eurasian Economic Community will do it in 2 months.”

Then in November 2017, Deputy Finance Minister Alexei Moiseev said that the cryptoruble cannot be the country’s actual cryptocurrency and suggested for its name to be changed to cyber-ruble.

Although, Glazyev is positive on the creation of cryptoruble, the Bank of Russia and the Finance Ministry are a bit skeptical saying that currently there is no need for the cryptocurrency. Last week, Interfax quoted the finance minister saying “To be honest, I do not even understand what a cryptoruble is…I understand what an electronic ruble is. I understand what ‘a Yandex-purse’ is … If you declare that we renounce the constitutional principle that the issue is produced by the central bank, then, of course, we can make a cryptoruble.”

Toeing the same line of thought, first deputy governor of the central bank Olga Skorobogatova said that the bank “does not think this [cryptoruble] is advisable from the point of view of the macroeconomics of the population.”

Rather, she has proposed for “a supranational digital currency within the BRICS or the Eurasian Economic Union (EAEC).” She further stated that the Bank of Russia believes that “The issue of a common cryptocurrency for a number of countries is very promising, more than that for a single nation.”