The mere existence of cryptocurrency has prompted government bodies to consider the legality of these new currencies, and attempt to determine if they pose threats to the existing currency of their nations.

There have been reports of countries considering implementing their own cryptocurrencies over the last few months, but for one reason or another most of these proposals have not come to fruition.

Now, however, it seems like Russia is on the verge of implementing their own cryptocurrency–and President Vladimir Putin has given the idea of Russia’s own state-backed cryptocurrency, the ‘CryptoRuble,’ the greenlight.

Breaking Trends

The news comes as somewhat of a contrast to the Russian Central Bank’s hard stance against the free trade of cryptocurrencies, and it would seem that the CryptoRuble is Russia’s solution to competing within a market that is continuing to spend, trade and invest with digital currencies.

The CryptoRuble is different in many ways to typical expectations of cryptocurrency, as it will not be decentralized and reports state that it will not be possible to mine. Instead, the currency is backed by Russia’s government and can be exchanged at any time for rubles with the stipulation is that if the person attempting to trade CryptoRuble for rubles cannot explain where their money has originated from, they will face a tax of 13%.

Russia’s Minister of Communications and Mass Media, Nikolay Nikiforov stated:

“I am so confident to declare that we will run CryptoRuble just for one simple reason: if we don’t, our neighbors in the Eurasian Economic Community will do it in a couple of months.”

Estonia’s Failed Attempt

Interestingly, while not a part of the Eurasian Economic Community–Estonia, an EU member nation, attempted to launch their own cryptocurrency a few months ago. Had it not been for objections by the EU, Estonia might have launched the world’s first state-backed cryptocurrency.

The EU’s objections to Estonia launching their own cryptocurrency were based on eurozone regulations that dictate what is permissible for the EU’s member nations to implement. Estonia’s intent to launch their own cryptocurrency (Estcoin) was in violation of rule that stipulates the EU must obey the euro as its sole currency.

In a press statement made by Mario Draghi, president of the European Central Bank, Draghi defended the ECB’s decision to veto Estonia launching their own cryptocurrency, by stating:

“No member state can introduce its own currency; the currency of the euro zone is the euro.”

Russia, however, is under no such legal obligation and their decision to implement their own cryptocurrency does not have to yield due to the opinion of international regulatory bodies.

Russia is joined by the company of India, who might also launch their own cryptocurrency called ‘Lakshmi’–as an attempt to reclaim the market in India that is increasingly favoring currencies like Bitcoin.

Nationalizing Cryptocurrencies

Overall, stances about Russia’s decision to launch an official cryptocurrency can be divided into two major camps.

One stance is that the government has a right to protect the value of their own currency, and launching an official cryptocurrency that is under government control might be a means to do so – this is Russia’s stance.

However, the fact that the currency is government controlled has raised concerns for cryptocurrency enthusiasts. One of the major draws of most cryptocurrencies is their decentralized nature, meaning a state-backed cryptocurrency could be seen as a potential conflict of interest.

Regardless, as nations continue to seek ways to counter the cryptocurrency movement, official government-backed cryptocurrencies could soon be a reality.  

 

Image credit: pixabay.com

 

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