The Central Bank of Russia hopes for issuing a digital ruble instead of bitcoin, according to the press release published on the regulator’s website.
The central bank will ask for opinions from the market participants and the financial analysts until December 31, 2020, before making a final decision on the digital ruble.
The regulator noted that the digital ruble would be the Russian version of the central bank-issued digital currency (CBDC) fully controlled by the authority. It will have all the state money characteristics and circulate along with the fiat money and electronic versions of the national currency.
This digital ruble is not a cryptocurrency
Meanwhile, the local crypto experts have already said that the proposed digital ruble was nothing close to cryptocurrency as the central bank will control the digital ruble’s issuance and all the transactions with the new currency will be registered on the centralized platform controlled by the regulator.
As the FXStreet reported before, Russia introduces strict laws to restrict cryptocurrency circulation in the country. People who fail to report on their crypto proceeds may go to jail for three years, while companies that promote cryptocurrency trading may be closed down.
Additionally, in accordance with the new legislation, cryptocurrency as a means of payment is outside the law in Russia, so it is illegal to buy and sell goods for digital currencies. However, the proposed digital ruble is not covered by the law because it is supposed to be issued and controlled by the central bank.
Recently, the European Central Bank (ECB) announced that it was working on digital euro that is not decentralized and is total controlled by the central bank.
The European regulator pointed out that the proposed digital euro would not qualify as a cryptocurrency as it would be traceable and controlled by the central bank. The ECB wanted to ensure that it would remain a custodian of the euro, whatever the form is.
Bank of England and Bank of Canada are also exploring the opportunities of CBDC and express concerns about such cryptos like Bitcoin. In the latest communique published by the top seven countries’ financial leaders (G7), they do not consider the cryptocurrencies as valid money and said they are ready to embrace crypto, only if they keep it under control.
How will the increased focus on CBDC affect Bitcoin?
The creation of CBDC will bring blockchain and crypto technologies closer to mass adoption and help overcome the barrier that stalls the broader usage of the digital money.
Simultaneously, this development may be beneficial to the industry as more people would become accustomed to this form of money and will get the idea behind Bitcoin. So the cryptocurrency market reacts positively to the news about CBDC development and central banks’ interest in getting involved in the industry and creating their own digital coin.
However, the issuance of central bank-controlled digital currencies may lead to increased pressure on Bitcoin and other truly decentralized coins. The digital euro, yuan, or ruble helps governments get better oversight into cash flows and control over people’s lives more.
Many crypto analysts are worried that CBDC will increase inequality and give the state too much power to push their agenda and punish dissenting business and people by kicking them out of the financial system. In this vein, they might want to eliminate the competition and outlaw the truly decentralized currencies such as Bitcoin.
The latest G7 announcement indicates that they will oppose Facebook’s Libra until it is regulated adds credibility to this statement, as long as Russia’s attempts to block cryptocurrency payments inside the country.