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Russia roots for cryptocurrencies as means of payment

Russia roots for cryptocurrencies as means of payment

Russian President Vladimir Putin said that cryptocurrencies were too unstable to be used to settle oil contracts but that they still deserved a place as a means of payment.

Russia gave cryptocurrencies like bitcoin legal status in 2020. It, however, banned digital assets from being used in payments, saying that only the Russian ruble could be considered legal tender.

In early June, Russian Central Bank Governor Elvira Nabiullina told CNBC that digital currency was the “future for our financial system,” even though she was referring to central bank digital currencies rather than crypto.

Unlike cryptocurrencies, which are designed to be decentralized, Central Bank Digital Currency (CBDC) are issued and controlled by authorities.

The Bank for International Settlements has already given its full backing to the development of CBDCs, a move to ensure ‘Big Tech’ does not take control of money.

BIS which is coordinating many of their discussions on digital currencies set out recommendations on how a CBDC such as cryptocurrencies, digital dollar should look.

As part of its upcoming annual report, it estimated that at least 56 central banks and monetary authorities, representing around a fifth of the world’s population, are now looking at digital currencies as commerce shifts online.

Also Read:

  1. Bitcoin becomes legal currency in El Salvador
  2. BIS gives Central banks go ahead on digital currency
  3. Elon Musk okays purchase of Tesla using Bitcoin

“ Central bank digital currencies (CBDCs) offer in digital form the unique advantages of central bank money: settlement finality, liquidity and integrity. They are an advanced representation of money for the digital economy,” said BIS on its website.

Demands on retail payments are changing, with fewer cash transactions and a shift towards digital payments, in particular since the start of the COVID-19 pandemic.

According to BIS, the ultimate benefits of adopting a new payment technology will depend on the competitive structure of the underlying payment system and data governance arrangements.

“The same technology that can encourage a virtuous circle of greater access, lower costs and better services might equally induce a vicious circle of data silos, market power and anti-competitive practices. CBDCs and open platforms are the most conducive to a virtuous circle.”

On September 8, 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender — a milestone for cryptocurrencies around the world.

The country’s president Nayib Bukele welcomed the gesture, saying it would increase Salvadorans’ access to financial services, as well as boost tourism and investment in the country.

But convincing the public may not be easy.

The country approved a law to classify Bitcoin as legal tender in the Latin American country on June 9 this year.

“The #BitcoinLaw has just been approved by a qualified majority” in the legislative assembly, President Nayib Bukele, who proposed the law said.

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Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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