As momentum builds around the ‘digital ruble’, the Central Bank’s proposed digital currency (CBDC) of the Russian Federation, the country’s parliament has gradually moved closer to the historic legislation.
On July 11, the lower house of parliament, the State Duma, approved the bill in its third reading, taking it to the upper houses. If approved, the legislation will be on its way to the president’s table.
The bill was introduced in the plenum of the State Duma in December 2022 and passed the first reading in March 2023.
Under the proposed law, the Bank of Russia (BoR) will act as the operator of the CBDC infrastructure taking responsibility for issuance and security.
The bill also defines critical concepts such as ‘users’, ‘platforms’, ‘investors’ and other participants in a bid to provide robust regulation and clear guidelines for the sector.
The Russian government launched plans for the CBDC to take advantage of blockchain technology to provide new payment alternatives and cross-border solutions to compete with cryptocurrencies such as Bitcoin, which described as bad for the economy and risky for citizens.
With payments and transfers at the center of the policy, users will not have savings accounts. While there are no fees for individual users, corporate clients will pay transaction fees of up to 0.3%.
Meanwhile, the Interfax news agency reported on Tuesday that Russia will begin its pilot test of the digital ruble in August as it plans to move the launch date closer.
Russia’s Blockchain Symbiotic Relations
Blockchain and digital currencies have had a dangerous relationship in Russia. At first, Vladimir Putin, the country’s president, criticized digital assets for various reasons that culminated in a widespread ban.
Amid the ban, Putin praised the underlying technology behind cryptocurrencies and called for their mass adoption to aid cross-border payments and the decoupling of financial monopolies around the world.
The invasion of Ukraine caused Russia to receive economic sanctions that made it difficult for its citizens to trade globally, which led to Russian companies. deployment crypto assets along with other alternatives to mitigate Western sanctions.
Following Russia’s ban on Society for Worldwide Interbank Financial Telecommunication (SWIFT), digital asset exchanges record massive inflows to the region with many wondering if the country would lift its ban on cryptocurrencies.
Gleb Jout, director of Bitget Russia, explained that citizens are turning to virtual assets to avoid massive inflation as a result of global sanctions.
“Even people who didn’t have crypto are now considering how to get Bitcoin, Ethereum or USDT and save some of their money before the country hits a period of extreme hyperinflation, which is already starting.”
