Russia is poised to become the first country to launch a cryptocurrency that is backed by a nation-state.
It will be similar to bitcoin, as the CryptoRuble cryptocurrency will be underpinned by an online ledger known as a blockchain.
CoinTelegraph, a cryptocurrency news website, disclosed that CryptoRubles can be exchanged for rubles, Russia’s currency. A holder, however, will be levied a 13 percent tax if he fails to explain where the crypto rules came from.
CryptoRuble is also different from bitcoin in the sense that it is not possible for people to mine the virtual currency- the process of confirming cryptocurrency transactions and adding their record to the blockchain so as to generate new units of the currency.
Russia’s move is said to be in anticipation of Eurasian Economic Community’s future actions. Russia’s Minister of Communications Nikolai Nikiforov said: “I confidently declare that we run CryptoRuble for one simple reason: if we don’t, then after two months our neighbors in the EurAsEc will.”
Russia’s finance minister, Anton Siluanov, also admitted that cryptocurrencies are a “fact of life”. He also gave a hint that his country is planning to become more involved in the digital currency space.
Siluanov also shared that Russia planned to regulate the circulation, trading, and mining of digital currencies in order to get more tax revenues and protect people and investors.
Siluanov said since cryptocurrencies seem inevitable, Russia needs to create a legal framework already for the operations. He said: “We need to control these operations if these operations contravene the law, including money laundering legislation. The state cannot remain on the sidelines. The states sees all the risks that might arise during the purchase and sale of these cryptocurrencies, especially for the general public, who do not always have the requisite level of education.”
Russian President Vladimir Putin, however, said prior to Siluanov comments, that cryptocurrencies like bitcoin were used for criminal activity and would be blocked by his country’s central bank.
Putin said: “The usage of cryptocurrencies carries serious risks. I know the central bank’s position on that. Cryptocurrencies are issued by an unlimited number of anonymous bodies. Thus buyers of cryptocurrencies could be involved in unlawful activities.”
Price of bitcoins hit a record high the past month and is currently pegged at $5.615, putting the market capitalization of the world’s most valuable cryptocurrency at almost $100 billion.