Putin signs law for digital ruble in Russia

Putin signs law for digital ruble in Russia

The Digital Ruble: Russia’s Central Bank Digital Currency

Russia is set to make significant strides in the world of blockchain and digital currencies with the recent approval of the digital ruble bill. On July 24, President Vladimir Putin signed the bill into law, paving the way for the official launch of the digital ruble on August 1, 2023. This move solidifies Russia’s commitment to exploring the potential of blockchain technology and its application in the financial sector.

The Framework of the Digital Ruble

The digital ruble law comprises several amendments to existing Russian federal laws, including those related to bankruptcy and inheritance. However, the most noteworthy aspect of the legislation is the authorization it grants to the Russian central bank to launch the first central bank digital currency (CBDC) pilot program involving real consumers. The central bank will be responsible for the digital ruble infrastructure and will hold all stored assets.

The Role of the Digital Ruble

The digital ruble is not intended for investment purposes but rather as a payment and money transfer method. It is poised to become the third form of money in Russia, alongside cash and non-cash rubles. The introduction of the digital ruble is not compulsory, and individuals will have the freedom to choose whether or not to adopt this new digital currency. Bank of Russia governor Elvira Nabiullina emphasized the voluntary nature of its adoption, stating, “No one is going to force anyone into the digital ruble…This is a new opportunity.”

Advantages and Expectations

The adoption of the digital ruble brings with it a host of potential advantages for both individuals and businesses. According to Nabiullina, it is expected to offer greater convenience and cost-effectiveness. The digital ruble has the potential to revolutionize the payments landscape, making transactions faster, cheaper, and more secure. However, the government does not anticipate mass adoption before 2025 or even 2027, according to Bank of Russia deputy governor Olga Skorobogatova.

The Legislative Journey

The digital ruble bill’s approval follows a rigorous legislative process. The State Duma, Russia’s lower parliament house, initially passed the bill in its third and final reading on July 11. Subsequently, the Federation Council, or Senate, approved the bill on July 19, marking the last step before President Putin signed it into law. It is worth noting that the digital ruble bill was registered in December 2022, indicating the government’s long-standing interest in exploring digital currencies and blockchain technology.

The Intersection of CBDCs and Cryptocurrency Regulation

Interestingly, while Russia is pushing forward with CBDC legislation, it has yet to finalize regulations for cryptocurrencies. The introduction of cryptocurrency regulation has faced delays and postponements. Despite promises to pass legislation related to crypto mining, taxation, and international settlement crypto, progress in this area has been limited. The focus on the digital ruble demonstrates Russia’s cautious approach to digital currencies, prioritizing the CBDC as a controlled and centralized alternative.

In conclusion, the approval of the digital ruble bill signifies Russia’s commitment to embracing blockchain technology and its potential in the financial sector. The digital ruble aims to enhance payments and money transfers, offering individuals and businesses increased convenience and cost savings. However, wider adoption is not expected until the mid-2020s. As Russia enters the world of CBDCs, its approach to cryptocurrency regulation remains a separate discussion. With the digital ruble on the horizon, Russia is poised to make significant strides in the realm of digital currencies.

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