James Cirrone

Russian President Vladimir Putin has signed a bill that will introduce a digital version of the ruble, after <a href="https://blockworks.co/news/russian-duma-greenlights-digital-ruble">the effort was initially sanctioned by the Duma</a> on July 11, 2023.



Putin quite literally gave the law his stamp of approval on Monday, which now makes Russia the largest nation in the world to implement a central bank digital currency (CBDC).



The CBDC pilot will go into effect on Aug. 1, 2023, which comes a little under three years after the Russian government first published a consultation <a href="http://www.cbr.ru/StaticHtml/File/113008/Consultation_Paper_201013_eng.pdf">paper</a> on the <a href="https://blockworks.co/tag/ruble">digital ruble</a> in October 2020.&nbsp;



Elvira Nabiullina, the governor of Bank of Russia, said in a <a href="https://ria.ru/20230721/rubl-1885538360.html">statement</a> that citizens would not be forced to use the CBDC and that it will serve as an additional currency.



The Bank of Russia will operate and maintain the necessary infrastructure to get a CBDC up and running, according to the text of the <a href="http://publication.pravo.gov.ru/document/0001202307240009?index=1">law</a>.



Russia is joining 21 other nations that have launched pilot programs for CBDCs, according to the Atlantic Council CBDC <a href="https://www.atlanticcouncil.org/cbdctracker/">tracker</a>. Once the digital ruble officially launches past the beta, Russia will join a collection of 11 other nations that have actually instituted a CBDC — including Nigeria and a smattering of countries in the Caribbean.&nbsp;



Russia’s move toward digital currencies comes at a moment when global government interest in CBDCs is at an all-time high. A 2022 Bank of International Settlements survey found that <a href="https://blockworks.co/news/banks-exploring-potential-cbdc">93% of central banks have shown interest in exploring a CBDC</a>.



Meanwhile in the US, England and Singapore, <a href="https://blockworks.co/news/cbdc-jobs-multiply">jobs having to do with CBDCs are exploding</a>. Branches of the Federal Reserve in San Francisco, Boston, and Cleveland are all hiring CBDC architects, Blockworks reported Monday.



While the US hasn’t announced an official CBDC pilot, <a href="https://blockworks.co/news/banks-pen-paper-cbdc-implementation">the Fed joined up with numerous central banks to pen a paper on the topic</a> in May.



It remains to be seen how Russia’s CBDC will fare, but Nigeria — the next biggest nation to have launched one for its citizens — <a href="https://blockworks.co/news/nigeria-cbdc-push-limits-cash-withdrawals">has run into major issues with its implementation</a>.



Molly Jane Zuckerman contributed reporting.



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CBDC

Putin says ‘yes’ to Russia’s digital ruble

According to multiple local media <a href="https://tass.com/economy/1645423">reports</a> and the Russian government itself, the Duma has approved a law that will introduce a digital ruble.&nbsp;



The Duma shepherded the law through the <a href="https://cis-legislation.com/cis/russia/law-techniques.html">required three readings</a> to advance it up the chain to the Federation Council and ultimately, President Vladimir Putin, according to the law’s text.&nbsp;



Should Putin <a href="http://duma.gov.ru/en/news/28319/#slider-27077-27083">sign off</a> on the law, it will make <a href="https://blockworks.co/tag/russia">Russia</a> the largest nation to officially adopt a central bank digital currency, or <a href="https://blockworks.co/tag/cbdc">CBDC</a>.



Discussions of a digital currency issued by the Russian state have been going on for years. Back in November 2021, Reuters reported on a pilot program that was set to debut in 2022. 



Over a year earlier in October 2020, the Bank of Russia, the country’s central bank, published a <a href="http://www.cbr.ru/StaticHtml/File/113008/Consultation_Paper_201013_eng.pdf">consultation paper</a> studying the idea of a <a href="https://blockworks.co/tag/ruble">digital ruble</a>.&nbsp;



As put forth in that original consultation paper, the Bank of Russia will operate and organize the digital ruble platform, according to a <a href="http://duma.gov.ru/news/57491/">press release</a> from the Russian government.&nbsp;



This comes as <a href="https://blockworks.co/news/banks-exploring-potential-cbdc">93% of central banks have shown interest in exploring a CBDC</a> in some form, according to a 2022 Bank of International Settlements survey.&nbsp;



Eighty-six banks responded to that survey, but as of June, 130 countries have launched, are exploring or have canceled CBDC programs, according to the Atlantic Council CBDC <a href="https://www.atlanticcouncil.org/cbdctracker/">tracker</a>.



<a href="https://blockworks.co/tag/nigeria">Nigeria</a> is currently one of the largest nations by population to have actually established a CBDC. Despite its launch in October 2021, the eNaira did not receive a warm reception from Nigerians. Protests erupted and businesses faced closures in response to the <a href="https://blockworks.co/news/nigeria-cbdc-push-limits-cash-withdrawals">launch of the eNaira and the ensuing restrictions</a> on physical cash withdrawals.



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Russian Duma greenlights digital ruble

Ben Strack

<div id="highlights-block_6210035252a70" class="highlights">
 <ul>
 <li>Russia’s Ministry of Finance has reportedly begun accepting public comments on rules around digital asset transactions</li>
 <li>The Bank of Russia completed the prototype of its digital ruble platform in December, and 12 banks agreed to test the platform</li>
 </ul>
 
</div>



As Russia mulls rolling out a state-sponsored digital ruble, crypto regulations more broadly remain up in the air amid clashes between the country’s central bank and finance ministry.&nbsp;



A crypto bill appears to still be in the works, and Russia’s Ministry of Finance has <a href="https://regulation.gov.ru/projects#npa=125083" target="_blank" rel="noreferrer noopener">signaled</a> that it is seeking public comments until March 18 on rules around digital asset transactions.&nbsp;



Nick du Cros, head of compliance and regulatory affairs at digital asset manager CoinShares, called the potential of a bill this year “a significant positive development.”



“The central bank doesn&#8217;t hold the pen on the draft legislation, so it will need to lobby very hard for the legislation to reflect its point of view,” du Cros told Blockworks. “As it looks now, the central bank&#8217;s view that there should be an outright ban on crypto and crypto mining looks less likely than Russian-centric regulation which allows crypto to exist with the current banking network.”



Russian Finance Minister Anton Siluanov said Friday that he hopes such a bill passes before the end of the year, <a href="https://www.reuters.com/article/idUSR4N2UR004" target="_blank" rel="noreferrer noopener">according to Reuters</a>.



The Russian government and central bank last week <a href="https://cms.blockworks.co/russias-move-to-regulate-cryptocurrency-puts-other-countries-on-notice/" target="_blank" rel="noreferrer noopener">reached an agreement</a> to draft legislation or amend existing laws recognizing crypto as currency. News outlet <a href="https://www.kommersant.ru/doc/5206307" target="_blank" rel="noreferrer noopener">Kommersant reported</a> that legislation would be drawn up by Feb. 18.



Bloomberg News <a href="https://www.bloomberg.com/news/articles/2022-02-15/nabiullina-digs-heels-in-over-russian-plan-to-legalize-crypto" target="_blank" rel="noreferrer noopener">reported</a> that government officials at the Bank of Russia and the Ministry of Finance did not reach an agreement on the best path forward on Tuesday.&nbsp;



The central bank had previously <a href="https://cms.blockworks.co/proposed-russian-crypto-ban-may-push-miners-west/" target="_blank" rel="noreferrer noopener">proposed to restrict miners</a> and crypto trading over concerns that they could endanger the country’s financial system. President Vladimir Putin has said he supports a plan to tax and regulate the space.



The Bank of Russia, meanwhile, launched a prototype of its digital ruble platform in December, with 12 banks agreeing to test it. Three banks have connected to the platform, the bank said Tuesday, with two completing digital ruble transactions between clients via mobile applications.



Focusing first on the digital ruble before opening up the system to other currencies could give the country a leg-up in the market, Stan Miroshnik, partner at growth equity fund 10T, told Blockworks.



Noting a parallel to China’s <a href="https://cms.blockworks.co/china-debuts-digital-yuan-at-winter-olympics-amid-warnings-from-us-senator/" target="_blank" rel="noreferrer noopener">digital yuan</a>, Miroshnik said the state-sponsored cryptocurrency helped phase out other speculative digital assets.



“To the extent you want to create your own dominant digital asset that the central bank has control of…I think that’s the playbook,” Miroshnik said. “I think that’s the tension we’re seeing playing out.”



The latest draft legislation has been published while the G-20 Finance Ministers and Central Bank Governor Meeting takes place, du Cros said, adding that the timing indicates Russia is more interested in “bespoke” regulations over international crypto standards.



The Bank of Russia and Ministry of Finance did not immediately return a request for comment.



<a href="https://cms.blockworks.co/ukraine-passes-law-legalizing-crypto-as-threat-of-war-looms/">Ukraine passed amendments to its law</a> on digital assets to ratify the eventual creation of a legal market for cryptocurrencies as the threat of an invasion by Russia looms.



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