Bank of Russia Moves Against Private Stablecoins
- Bank of Russia has been against private stablecoins over the last two years.
Russia is one of the most crypto-friendly nations in the world, but its apex bank, the Bank of Russia, has moved against private stablecoins in the country. The Bank of Russia strongly opposes the idea backed by the Ministry of Finance, supporting the launch of private stablecoins.
A representative of the central bank told a local Russian media outlet about the institution’s concerns about private stablecoins. These types of stablecoins are highly risk-prone. This is because the pool of assets underlying them does not belong to the owner. The price of the stablecoin is not stable and the redemption at the face value of the asset in the collateral is not guaranteed.
Ivan Chebeskov, director of the financial policy division of the Ministry of Finance, recently expressed the support of his ministry for the creation of stablecoins linked to assets like the ruble, gold, oil, or grain. He referred to it as the proper way for improving technology and advised private businesses to use this type of financial resource if they felt it was essential.
According to the Central Bank official, the Russian ruble is the only currency that can be used as payment. He noted that the digital ruble combines all the benefits of a digital medium of exchange and the stability of a full-fledged currency, making it the Bank of Russia’s chosen substitute for private stablecoins.
The Bank of Russia and Its Fight Against Private Stablecoins
This will not be the first time the Central Bank of Russia has criticized private stablecoins. In 2020, the financial body heavily moved against plans to roll out private stablecoins pegged to the Russian ruble. At the time, a first deputy governor of the Russian central bank Sergei Shvetsov, stated that the bank intends to ban private companies from providing stablecoins backed by the nation’s fiat currency.
Shvetsov cited Chinese rules on the digital yuan that make it unlawful for other parties to issue stablecoins pegged to the yuan. He said,
China put a blanket ban on any yuan-pegged stablecoins. I think that we are not far from that. The bank will suppress everything that is positioned as a means of payment. We proceed from the premise that the ruble is the means of payment of the Russian Federation.
Since last year, there has been a flurry of discussion over the regulation of cryptocurrencies and their movement in Russia. The Ministry of Finance is reportedly setting up its version of the bill “On Digital Currencies,” which seeks to establish regulations for the use and distribution of digital currencies. The idea is planned to establish a specific record of crypto-exchanges and crypto-exchangers (operators).
One of the most recent revisions included a provision allowing businesses and individuals to use cryptocurrencies as a form of payment for international trade. However, it will ban the use of crypto for payments in Russia. The review only recognizes bank-backed transactions.