Russia is going full blown cryptocurrency. Today, October 18, president Vladimir Putin has given the green light for the government to start creating its own cryptocurrency, dubbed the “CryptoRuble.”
CryptoRuble: Russia Goes Crypto
The CryptoRuble emerged from a closed-door meeting between Russian communication minister Nikolay Nikiforov and president Putin had a closed-door meeting. After Putin authorized the cryptocurrency, developers began working on building the coin. In an announcement about the new project, Niiforov said the move was intended to act as a countermeasure to economic competition from other regions in Eurasia.
Nikiforov said, “I am so confident to declare that we will run CryptoRuble just for one simple reason: if we don’t, our neighbors in the Eurasian Economic Community will do it in a couple of months.”
Officials said the Russian government would finally issue a full ban on the mining of other cryptocurrencies once the CryptoRuble launches and goes into circulation. Additionally, authorities said the government had a roadmap to regulate the CryptoRuble fully.
Once issued to the public, Russian citizens will be able to exchange between Rubles and CryptoRubles at any time. Officials said if citizens do not have a valid reason why they converted their money to CryptoRubles, the government will take a 13 percent tax from the total value of the exchanged currency.
Additionally, the government will take a 13 percent tax on any profits made from exchanging Rubles for CryptoRubles. Officials said this tax is intended to maintain a balance of value between the two currencies.
Earlier today, the bitcoin price took a dive, though it is uncertain if it came as a result of the Russian announcement. Some have speculated that the mining ban will affect the bitcoin price, like with the Chinese anouncement. However, the announcement made no specific mention of a ban on Bitcoin itself.
A New International CryptoCurrency
CryptoRuble is intended to be made available internationally. As such, the Russian government will use a custom-made encryption as a way to keep the new cryptocurrency traceable.
Deputy minister of economics development Oleg Fomichev said international use is essential to the success of this new project.
“This mustn’t be a private currency,” he said, “but the one, which is issued by the state, controlled by the state and enable to provide circulation of digital money in light of the digital economy.
Vladimir Putin’s Long and Troubled History With Cryptocurrency
President Putin, and the Russian government in general, have waffled on their official stance regarding cryptocurrency over the years. Putin has been especially critical of Bitcoin — the most valuable and widely-used cryptocurrency in the world.
In Sochi, just a few days before the CryptoRuble announcement, Putin said, “Cryptocurrency is risky and can be used for a criminal purpose.”
“The use of cryptocurrencies bears serious risks,” he continued, giving examples of the digital currencies being used for criminal activities, such as money laundering and terrorism finance.
In order to combat the criminal side of the cryptocurrency world, Putin stressed that a strong regulatory environment is needed to make sure digital currencies are used safely and fairly.
A few days later, the idea for the CryptoRuble was born, complete with the regulatory environment Putin has long called for.
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Images via the Kremlin, Getty Images