Just recently, Russian Head of State, Vladimir Putin launched work on the development of a cryptocurrency as the country seeks to improve its financial operations. This includes the incorporation of the blockchain, which is a shared ledger technology that powers various types of digital currencies. The economic advisor to Mr. Putin, recently mention that a `crypto trouble`, would be a useful solution for getting around economic sanctions. According to Mr.Glazev, `this approach is suitable for our economic activities. We can be able to settle our accounts with our partners globally without worrying about sanctions.` He also mentioned that this new digital currency would have to be restricted to as tests are underway. Mr. Putin is believed to have in interested in the opportunities that digital currencies can provide. In fact, he recently held a meeting last year with Vitalik Buterin, who is the developer of the Etherum cryptocurrency. Mr. Putins approach to try and establish restrictions on the use of cryptocurrency might seem counterintuitive. This type of currency was developed to free of any form of controls and would be regulated through specific rules.
The blockchain technology makes it easy for various individuals to engage in financial transactions, without the need for an intermediary. This technology is still in its early stages, with some countries such as the European Central Bank and the Bank of Japan stating that this technology is still in its early stages. That said, various other financial institutions are in the process of evaluating the benefits of such a digital currency. In fact, countries such as Swedens Riksbank have invested a significant amount in researching about this type of currency. More so, countries such as North Korea are believed to have collected cryptocurrencies as a technique for making payments without detection. Although currencies such as the Bitcoin provide some level of anonymity, this makes them a good platform for illegal transactions. One thing is that it is not clear how this currency would help Russian companies to evade the financial sanctions.
According to Allan Waxman, who is the head of corporate business at Gazprombank, cryptocurrency is not the answer to all our financial complications. It might have a lot of potentials, but it’s not a quick fix for all our financial problems. He went to add, that the various parties that regulate the implementation of sanctions would clearly see this as a means of escaping sanctions. The interest in this type of currency increased last year with the increased trading of the Bitcoin currency. This introduced various fluctuations in the price thereby making it very volatile. In Russia, well over $300 million was accumulated in 2017 as the initial sale of tokens that were used to fund business projects. The national digital currency will be introduced to international markets. According to Oleg Fomichev, there is no point of only allowing the currency to circulate inside the country. It should not be a privacy currency, but one that can be issued and controlled by the sate. This has led to various concerns as to whether this currency would be free as it was initially meant to be.