Note by Igor: Digital Ruble by CBR.

Good Monday everyone.

On October 13th  Bank of Russia announced a public discussion on a virtual Ruble issue. We believe this is major news for digital finance last week. 

This initiative as well as the laws implemented earlier this year demonstrate that the Russian government is carefully observing the digital sector and working on establishing the tight regulation for it.

Just to remind that in 2020 some restrictive rules were introduced for the crypto market, which caused not a very positive reaction from the IT community, to say the least. Some new laws got approved, some are still under consideration.

New regulations were passed on crypto-trading and mining which will not allow its citizens to use crypto for payments from 2021 onwards. 

In general, in Russia, we see that regulation is moving towards closer tights for those working in crypto. And it is clear that the RF government would like to establish a central managing authority for digital space. The proposal of a virtual Ruble is a logical next step to it.

The consultation paper released last Tuesday by CBR has got an important and interesting initiative in itself. 

The initiative of course is not aiming for a free digital market setting to allow free-market circulation of digital currencies but launches future establishment of a virtual market under control. However, it is an important step towards the technological upgrade of the system and its facilitation. We see this trend globally. China, South Korea, and Sweden already are at the pilot stage of their tokens. When many others, including the USA, GB, Canada, etc entering the research stage. So it is no surprise that Russia is following this path too.

The Digital Ruble model described in the paper is practically the exact copy of the fiat Ruble, but will all the privileges of the digitalized asset ( transfer cost reductions, fast transaction, elimination of middle layers).

We liked the way the paper is written and the fact that it opens up the platform for discussions, suggestions, and recommendations from the public and suggests future involvement of experts in this field in the consultation and development.

It is stated in the paper that centralized and decentralized models are considered for system development. Some of the ideas, such as digital wallets, options for offline operations, look very promising and we, at Credits, are interested to participate in this dialog.

Several questions opened for discussion and public feedback are exactly within our expertise. Credits team may try to contribute with its knowledge. Such a transformation will take time, and we will see the results and products much later. One thing is certain, this pandemic appears to be a catalyst for digitalization, pushing us to develop and execute new technological solutions quicker than before.