The introduction of the digital ruble in Russia, according to the concept the Bank of Russia presented last year, can end up in a ban on cryptocurrencies.
Director of HSE Banking Institute Vasily Solodkov shared his forecast at the national blockchain conference, Blockchain/Finance 2021.
The interest in cryptocurrencies is fuelled by their obvious advantages such as cross-border payments, anonymous transfers, as well as the system’s decentralized registry based architecture, the expert said. Cryptocurrencies are quite capable of offering competition to fiat currencies. However, the digital ruble the way it was proposed is unlikely to be competitive in relation to conventional cryptocurrencies.
“Does the ruble, cash or non-cash, have any cross-border functionality now? Why should the digital ruble suddenly have it? This has nothing to do with technology,” Vasily Solodkov notes.
A centralized register, if anything, increases the risks. If banks no longer provide payment services, it will significantly limit funding opportunities for small and medium-sized market participants. Furthermore, the Central Bank is the trendsetter on the market, which means a situation where cryptocurrencies are banned is also quite possible.
“I wrote about this even before a similar thing happened in China; we have seen the bitcoin collapse exactly on news from China, where the regulator banned bitcoin operations,” he explained.
At the same time, the digital ruble, unlike any cryptocurrency, can become a full-fledged currency — this means it will be accepted as legal tender and equated with cash and non-cash money for unrestricted exchange, Solodkov says.
The challenge for regulators around the world is not cryptocurrencies, but stablecoins, notes Dmitry Kochergin, professor at the Department of Economics, St. Petersburg State University.
“The role of cryptocurrencies in payments is negligible, as is their market capitalization, for all the hype around all major cryptocurrencies. Stablecoins like Diem (ex-Libra) from Facebook are another matter,” Kochergin says.
The expert reminded that the platform already has 3 billion users, which exceeds the populations of the United States, the European Union and China taken together.
“Global stablecoins challenge traditional finance and the role of central banks as initial money generators,” Kochergin added.
The Blockchain/Finance 2021 conference was organized by the Center for Distributed Ledger Technologies at St. Petersburg State University.