Vladimir Putin wants new cryptocurrency ‘to evade international sanctions’

Related: Bitcoin’s turbulent history IBTimes US

The president of Russia, Vladimir Putin, is considering the development of a state-run cryptocurrency that could soon be used to shirk international sanctions.

Dubbed the “cryptorouble” – named after the nation’s own currency – the Kremlin has started the probing enhanced use of financial technology at a time when virtual money such as bitcoin has enjoyed an unprecedented rise in value, the Financial Times (FT) said.

Officials indicated that Putin had already ordered work on a new form of cryptocurrency – a decentralised system based on the blockchain, a digital ledger.

Previous local news reports indicate that the leader’s decision was made as long ago as October 2017.

According to Sergei Glazev, Putin’s economic adviser, the system could be used to evade financial restrictions placed upon Moscow by other countries.

“This instrument suits us very well for sensitive activity on behalf of the state,” Glazev commented during a recent government meeting, the FT reported. He added: “We can settle accounts with our counter-parties all over the world with no regard for sanctions.”

The advisor said that the Kremlin should be able to “track” the money as it is transferred between users. Transactions on a blockchain are, by nature, available for everyone to see.

It remains unknown how the cryptorouble would be issued.

Officials from Russia’s central bank have in the past appeared unconvinced about the virtues of virtual currency. Last year, Bank of Russia chief Elvira Nabiullina likened it to a pyramid scheme that had the potential to “undermine the circulation of money in the country”.

BitcoinRussia embraces cryptocurrency Pixabay/Creative Commons

In the past year, the popularity and mainstream attention on cryptocurrency have both surged.

It has, however, for years been the money of choice by criminals trading on the so-called dark web – leading many businesses and banks to eschew widespread adoption.

Worse still, nation states such as North Korea are reportedly now targeting cryptocurrency exchanges in order to raise money for nefarious purposes, including the suspected avoidance of sanctions.

While an official position from Russia remains murky, Putin has previously spoken out about the need to welcome technological change across all industries. The president said during a 2017 speech at the International Economic Forum in Saint Petersburg: “It is necessary to draft an entirely new, flexible regulatory foundation for introducing digital technology in all areas of life.”

In 2016, the official stance was much different. According to news outlet Interfax, Russia’s Ministry of Finance said that using or mining bitcoin could be punished by up to 7 years in prison.

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