Vladimir Putin Orders Work on ‘CryptoRuble’ to Counteract U.S.-Led Sanctions
Russian President Vladimir Putin has ordered his government to begin work on a national cryptocurrency, which the media has dubbed the ‘CryptoRuble.’ Although Moscow has already expressed interest in a national cryptocurrency, the latest call is driven by a desire to circumvent Western sanctions against Moscow.
Cryptocurrency to Fight Economic Sanctions
Putin’s orders were initiated after a meeting with economic adviser Serge Glazev, who indicated that a nation-backed cryptocurrency would be a “useful tool” to circumnavigate U.S.-led sanctions.
According to the Financial Times, Glazev indicated that a national cryptocurrency “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.”
Glazev says the Cryptoruble would be similar to the national currency, but with supply and circulation “restricted” to allow the government to monitor its moves. As CCN reports, it remains unclear whether the CryptoRuble would be issued by the Bank of Russia or some other government body.
Since 2014, Russia has been under economic sanctions by the United States and its European allies over its alleged involvement in destabilizing Ukraine. The sanctions were officially targeted in March 2014 after the Crimean referendum, which resulted in Russia’s annexation of the region. Relations between Russia and the U.S. have deteriorated in recent years, with both sides backing opposing factions in the war on Syria.
Before the new year, Russia’s finance minister indicated that the Kremlin was developing legislation to govern cryptocurrency trading. The new laws will govern all aspects of the crypto economy, from taxation to mining. The announcement came just months after Russia briefly banned then reinstated cryptocurrency trading and indicated it would implement specific regulations to govern the market. Not even two years ago, the Finance Ministry said it would pursue seven-year prison sentences for bitcoin users.
The shift in sentiment reflects growing acceptance of cryptocurrency among mainstream and government circles. In fact, Russia’s decision not to ban cryptos came after Putin met with members of government and the business community. In the case of Russia, it also represents the need to develop new ways of kick starting a moribund economy. Russia was hit hard by the oil-price collapse, with sanctions making the situation even worse.
Growth appears to have returned, with gross domestic product (GDP) expanding for four consecutive quarters through Q2 2017.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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