For an extended period, Russia’s financial systems have opposed private stablecoins. This is especially true of the Central Bank of Russia. In a new episode of the long-standing rivalry between The Central Bank of Russia (CBR) and the Russian Ministry of Finance, representatives from the former have condemned the latter’s plan to promote stablecoins, which some private investors have attempted in Russia.
The Central Bank of Russia rejects the use of private stablecoins in Russia
Private stablecoins have faced resistance in Russia since 2021. Once more, the Central Bank of Russia has stepped up its fight against private cryptocurrencies. According to local media, a Central Bank of Russia representative has denied the existence of Russia-based stablecoins, which were first proposed by the Ministry of Finance’s director of financial policy department, Ivan Chebeskov, last week.
At that time, Chebeskov expressed his ministry’s backing for “stablecoins linked to assets like ‘the ruble,’ gold, oil or grain’ as a means of achieving financial stability.” He referred to it as the right way to develop cutting-edge technology and urged business owners to consider this type of financial instrument if they felt it necessary.
The Central Bank of Russia’s speaker stated that private stablecoins are “higher-risk” instruments. This is because the pool of underlying assets doesn’t belong to the issuer; this is true. They also said that because the issuer does not guarantee a par return, the price of stablecoin is not really stable.
The bank’s representative added that the ruble is still the only legal payment method in the country, in line with the Central Bank of Russia statement. Russian Bank officials were optimistic about a digital ruble, which they said would combine all of the digital payments’ benefits while retaining the stability of the national currency.
Experts in local industries sometimes point out that the Central Bank of Russia’s opposition to all private cryptocurrencies is at the heart of its distrust of digital currency. According to reports, the Central Bank of Russia favors a digital ruble as an alternative to private stablecoins.
On June 29, the director of the Central Bank of Russia Financial Technology Department, Kirill Pronin, declared that crypto mining might be legalized under certain circumstances if all of the mined assets are exported to foreign exchanges. The Ministry of Finance’s Ivan Chebeskov wasn’t about to let go, arguing the country’s current geopolitical concerns for Russian crypto miners who want to sell their coins abroad.
The position of the Central Bank of Russia on cryptocurrencies is clear: it opposes their operation. According to the Central Bank of Russia, the proliferation of cryptocurrencies threatens individuals’ well-being, financial stability, and the dangers linked with unlawful activities.
The Central Bank of Russia has modified its stance on digital mining: the regulator is prepared to legitimize it if mined digital currencies are sold outside Russia. On the other hand, the Central Bank of Russia is interested in the digital ruble platform’s creation and growth. The prototype was finished in December 2021, and testing began in January 2022.
The first stage of the digital ruble involves issuing digital rubles, opening digital wallets by banks and citizens, and C2C transfers (between individuals) and C2B transfers (from individuals to businesses – payment by individuals for goods and services). This is being tested. In April 2023, the Central Bank of Russia will start testing the digital ruble on actual money and clients and a pilot project for smart contracts.
The European Central Bank requests expedited stablecoin regulations
The Central Bank of Russia is not the only entity focusing on stablecoin regulation. The European Central Bank (ECB) has called for stronger regulatory oversight of stablecoins as soon as possible before they endanger the financial stability of EU member states.
Stablecoins are in the spotlight due to their rapid growth, increasing global use cases, and potential financial risk contagion channels […] the risks [posed] to financial stability from stablecoins are currently still limited in the euro area, but if growth trends continue at their current pace, this may change in the future.
They also note that stablecoins are continuing to develop, despite the risks and the recent crash of crypto assets—and they’re now “an essential component” of the cryptocurrency asset ecosystem.
The document, dubbed ‘The Role of Stablecoins in Cryptocurrencies and Beyond: Functions, Risks, and Politics,’ claims that the speed and pricing of stablecoin transactions fall short of what is necessary for real-world payment methods.
For the ECB, stablecoins must be effectively controlled by all EU member states, with the primary goal of promoting “responsible innovation” and ensuring “financial stability.”
The bank also says that before stablecoins become a risk to financial stability and the smooth functioning of payment systems, they must be regulated, supervised, and overseen. In recent months, the ECB has increased its pressure campaign in order to accelerate the adoption of crypto regulations across the eurozone. Meanwhile, Christine Lagarde, president of the ECB, has attempted to denigrate bitcoin’s value.