CryptoRuble Aims to Fight Sanctions
The Russian government seems to be in search of ways to circumvent international sanctions. One of the ways Putin’s government plans on doing this by developing their own cryptocurrency, the CryptoRuble. This may come as a surprise considering that Russia had been trying to pass legislation which could have caused bitcoin users to face jail time. Furthermore, the Russian president, Vladimir Putin had stated back in October 2017 that cryptocurrenies were “risky” and could be used to orchestrate crimes. Therefore, his government was looking to restrict access to cryptocurrency exchanges.
Cryptocurrency for Sensitive Activity
Sergei Glazev, one of Putin’s economic advisers, recently stated in a meeting, “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”. Mr. Glazev further added that the circulation of the CryptoRuble would be restricted in a manner which would allow it to be easily traceable.
A Regulated CryptoRuble
Putin is clearly intrigued by cryptocurrencies and he even met with Ethereum founder, Vitalik Buterin, in the summer of 2017. Soon after the meeting, the Russian president demanded that his cabinet come up with ways to regulate cryptocurrencies. The regulation of cryptocurrencies is not an easy task, as most governments around the world are discovering. This is mainly due to the complexities of their design. Despite the challenges, Russia’s government intends to regulate their state-backed cryptocurrency. Exactly how the government will do this is not yet clear.
Russia’s Plans May Not Work
Cryptocurrency experts and economists don’t think that the CryptoRuble has a good chance of accomplishing what the Russian government wants it to. They attribute this to the decentralized nature of cryptos and the fact that nobody is in charge. Considerable government oversight over a state-backed cryptocurrency is against the design principles of most cryptocurrencies. However, it’s worth noting that economists or experts might not always be right.
Experts May Not Always Be Right
For example, Paul Krugman, a Nobel prize-winning economist, has repeatedly criticized the economic fundamentals of bitcoin. And then, you’ve got other respected and extremely knowledgeable crypto-experts, like Andreas Antonopoulos, who make many sound arguments that are in support of bitcoin. The point here is that, whether it’s bitcoin or any other cryptocurrency like the CryptoRuble, nobody can ever know if something will work unless it is put to practical use for an extended period of time.
Russia is Not Alone
Russia is not the only country trying to fight international sanctions by issuing its own cryptocurrency. Venezuela has been planning to go around economic sanctions using its state-backed crypto called the Petro. North Korea has been accused of retaliating against US-led sanctions by stealing cryptocurrency. Ultimately, sanctions hurt the innocent citizens of a country much more than they affect a country’s government. Cryptocurrencies were designed to empower the people, and world governments are now trying to use them to further their own interests. It will be interesting to see what kind of outcome this will have.