Russia will launch CryptoRuble, a state-issued cryptocurrency, the Minister of Communications, Nikolay Nikiforov has announced. This announcement reportedly comes after an order from the Russian President.
Only last week, the Russia’s Central Bank announced plans to block all cryptocurrency exchanges amid concerns that anonymously issued virtual currencies were too risky. The CryptoRuble is expected to use blockchain technology. The Central Bank had in June announced the testing of a national digital currency on a distributed ledger.
How the CryptoRuble would function
The CryptoRuble wouldn’t be like the usual cryptocurrencies as it cannot be mined. The minister also explained that the authorities would issue and control the digital currency.
The CryptoRuble can be exchanged for regular Ruble. However, any gain in the CryptoRuble from the time it was bought and the time of sale will attract a tax of 13%. Also, if the owner of the CryptoRuble cannot explain its source, it would be similarly levied.
The minister suggested that the Russia is racing against time when he said: “I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after 2 months our neighbors in the EurAsEC will”. Kyrgyzstan, a EurAsEC member is already planning a gold-backed national cryptocurrency.
What’s the fate of Bitcoin and other Cryptocurrencies in Russia?
The announcement of a legal cryptocurrency isn’t exactly good news for crypto enthusiasts. It could spell doom for other virtual currencies in Russia. This is because the State wouldn’t want to entertain competition for their CryptoRuble. Russia has recently cracked down on bitcoin and other cryptocurrencies, president Putin himself highlighting the risks associated with unregulated cryptocurrencies.
The Cryptoruble should not affect the development of blockchain in the country; the authorities always speak glowingly of the importance of the technology which underlies cryptos. VVP himself had given his assurances to Ethereum’s founder during a visit.
Russia’s cryptocurrency may pave the way for many others like it.