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Russian President Vladimir Putin has given the go-ahead for Russian authorities to start working on a digital version of the national currency, to be dubbed the CryptoRuble. While currently at the investigation and planning stage, it is thought that such an endeavor might allow Russia to circumvent the international sanctions which have been levied on the country over its annexation of the Crimea and alleged interference in the 2016 US election.

Economic advisor to President Putin, Sergei Glazev, has described the proposed currency as,

suit[ing] 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.

There are many details still to be determined, such as whether the currency would be issued by the central bank or by commercial banks, and who would be able to use it. It is thought that like the recently announced Venezuelan Petro, the proposed CyrptoRuble would not be a cryptocurrency. Though transactions might be recorded on a blockchain ledger, the currency’s supply would not be controlled by mining but by government issue.

Glazev underscored this, pointing out that any permitted digital currency would be, “the same rouble, but its circulation would be restricted in a certain way” – i.e. it would be traceable and tracked. The lack of decentralisation and anonymity may help the Russian authorities to control the currency’s use internally, but it is difficult to see how such a currency could be used internationally to avoid sanctions. After all, if the Russian government can trace transactions, the U.S. government can too.

According to Russian news agency TASS, the government is still divided on digital currencies, with officials from the Ministry of Finance and Russian central bank expressing scepticism at a meeting on 28th December. Also unsure is Bishop Hilarion Alfeyev, described by Russia Today as the public face of the Orthodox Church in Russia, who recently voiced his disapproval of cryptocurrencies, calling them, “a new financial bubble, a new Ponzi scheme, behind which there is nothing”. 

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