Russian officials are developing a cryptocurrency intended to help the country evade international financial sanctions, the Financial Times reported on Tuesday.
Russian President Vladimir Putin has commissioned government agencies to work on a “cryptorouble,” the FT reported, citing Moscow officials.
The cryptocurrency would be another way to complete financial transactions in roubles, Russia’s currency, while evading sanctions that limit the country's financing options.
Sergei Glazev, an economic adviser to Mr Putin, told a recent government meeting that a cryptorouble would be a useful tool to get around international sanctions.
“This instrument 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,” Mr Glazev said.
He added that the cryptocurrency would be “the same rouble, but its circulation would be restricted in a certain way”, allowing the Kremlin to track its every move.
Mr Putin is thought to have been interested in the possibilities of cryptocurrencies for some time and held a meeting last summer with Vitalik Buterin, the founder of another cryptocurrency Ethereum.
Mr Putin’s move to try to establish control on any future cryptocurrency would appear to go against the original aims of payment method which had been designed to be free of any government control.
The blockchain technology allows numerous parties to update a single and immutable record of information without relying on a central authority, such as a central bank.
The technology is, relatively, still in its early stages with some financial institutions, such as the European Central Bank (ECB) and the Bank of Japan stating the blockchain technology was still too “immature” to be used as a payment system.
While currencies like bitcoin provide an element of anonymity, making them popular for illegal transactions, it is not clear how it would help Russian companies and individuals help the nation’s companies avoid international sanctions or detection by US authorities.
Interest in cryptocurrencies surged last year with frenzied trading in bitcoin bringing massive fluctuations in its price, making it highly volatile. In Russia, more than $300 million was raised in 2017 in “initial coin offerings” - sales of tokens used to fund business projects.
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