DEFINITION of CryptoRuble 'CryptoRuble'

The CryptoRuble is a digital currency currently in development, commissioned by Russian President Vladimir Putin. It likely won't be a cryptocurrency in the way that Bitcoin or Ethereum are, as it would be issued by the government and not mined. The value of the CryptoRuble is identical to the value of a regular ruble.

BREAKING DOWN CryptoRuble 'CryptoRuble'

Vladimir Putin made a stir in October of 2017 when he announced Russia would be issuing its own state-sponsored cryptocurrency, currently known as the CryptoRuble. According to Russian Minister of Communications Nikolay Nikiforov, the currency won't be mined and will instead be issued by the government, instantly differentiating it from other prominent cryptocurrencies like Bitcoin and Ether, which aren't regulated by any official body. As we currently understand it, the CryptoRuble won't operate much differently from a normal Russian ruble. Since it will only be able to be bought and sold but not mined, it's unlikely to reach the frenzy that cryptocurrencies of all kinds saw in 2017. It's just a ruble, but digital and encrypted. The CryptoRuble will have the same price the ruble has at the time, and it can be exchanged at will to traditional rubles. (Related: Burger King Russia Launches New Cryptocurrency)

It is speculated that one of the main reasons for Putin's interest in blockchain is that transactions are encrypted, and thus easier to discreetly send money without worrying about sanctions placed on the country by the international community. This theory gained traction after the Financial Times reported in Jan. 2018 that one of Putin's economic advisors, Sergei Glazyev, said during a government meeting that "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." (Glazyev himself was placed under sanctions by President Obama that prevented him from trading in or traveling to America in 2014.)

Another reason for the CryptoRuble is that it could help to stomp out other cryptocurrencies that are beyond government control like Bitcoin and Ether. Russia has made no secret of its displeasure with cryptocurrencies, with Putin himself saying in Oct. 2017 that cryptocurrencies were used mainly for crime. In Dec. 2017, Russia unveiled proposed regulations on cryptocurrencies and inital coin offerings (ICOs), although it is not expected that any change will be signed into law until Feb. 2018 at the earliest. (See: Russia May Ban Bitcoin Exchanges

CryptoRuble also yields additional tax revenue for the Russian government, as the latter will be able to tax citizens who are using the CryptoRuble, reportedly at a rate of 13%. 

So much of how this CryptoRuble would work isn't yet known at the time of writing, since the project is still being developed. So far we only have a few statements from Russian officials on which to base our understanding, but Putin seems intent on starting it up. It remains to be seen how Russia will implement this new version of their currency, and what will happen to other cryptocurrencies trading in Russia. (Related: Future of Russian Cryptocurrencies Unclear)

 

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