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For Russia, Central Bank Digital Currencies will replace cryptocurrencies

Photo of: Joseph Stone
by Joseph Stone

The Russian Central Bank has again made a release on what has become its favorite topic: the regulation of cryptos. It responded to criticism of its plan to issue a digital currency by saying that such a token could eliminate the need for people to use other cryptocurrencies.

In an opinion piece for Plusworld, Alexei Guznov, the head of the Central Bank (CB) legal department, said that the central bank’s digital currency (CBDC) that the CB hopes to pilot next year can function as a “response to the challenges posed by crypto-assets”.

The bank is by far the strongest opponent of cryptos in the Russian government system, and has repeatedly spoken out in favor of a nationwide ban or Chinese-style repression.

However, after declaring that it had no interest in issuing digital currency a year ago, the central bank has since reversed its position, joining many advanced and developing economies around the world in the race to issue a government token.

Despite the change, of course, the central bank refuses to budge from its anti-crypto position.

Although Guznov acknowledged that “crypto is a definite challenge to national payment systems and to the stability of national financial systems in general,” in part because of their speed and adoption rate, he believes,

“There is undoubtedly a problem with the use of crypto-actives in a system that includes money laundering, drug trafficking and terrorist financing”.

However, documents uncovered in an investigation by 110 news organizations seem to show that it is mostly global banking giants that move trillions of dollars for clients who are allegedly involved in fraud, embezzlement, money laundering, etc..

Guznov wrote,

“Therefore, we believe that the circulation of crypto-actives should be strictly regulated either in the form of a ban on their circulation or in the form of restrictions”.

And rather than helping the cause of crypto, Guzov believes that CBDCs, in Russia and abroad, will effectively eliminate the need for Bitcoin (BTC) and altcoins. He said that CBDCs could be a “valid alternative” to crypto, and concluded,

“We see that countries are now experimenting with projects to create national digital currencies. These can certainly be a clear alternative”.

However, as many crypto advocates have already pointed out, a CBDC would help governments increase their control over their citizens’ finances, unlike decentralized cryptocurrencies such as the BTC.