As Global Popularity Increases, Governments Look to Cryptocurrencies to Circumvent Sanctions

As reported by the Financial Times, Russian President Vladimir Putin has given the go-ahead for officials to create the cryptoruble, a state-sponsored cryptocurrency.  

The coin, which will play digital doppelganger to Russia’s fiat currency, the ruble, is being devised with the purpose of avoiding international sanctions.  Sergei Glazev, Putin’s economic advisor, indicated as much at a recent meeting which focused on the plans:

“This instrument suits us very well for sensitive activity on behalf of the state,” he stated to other top government officials. “We can settle accounts with our counterparties all over the world with no regard for sanctions.

Glazev continued to reveal that the currency would be under the direct oversight of the Kremlin, while it’s likely that the Central Bank of Russia would be in charge of distribution.  According to Glazev, the cryptoruble’s “circulation would be restricted in a certain way,” meaning that Russia’s central bank would likely be in charge of issuing the currency instead of miners introducing new coins into the system.

When news of Russia’s entertaining a national cryptocurrency leaked back in October, Russian communications minister Nikolai Nikiforov stated that Russia needed to beat other countries to the punch.

“I so confidently declare that we will launch the cryptoruble for one simple reason: if we do not, our neighbors in the Eurasian Economic Community will do it in 2 months,”

Russia Not Alone

Back in December 2017, Reuters reported that Venezuelan President Nicolas Maduro commissioned Venzuela’s own national cryptocurrency for the same purpose.

The petro, as it’s called, will be backed by Venezuelan oil reserves.  It was conceived amidst an economy held captive by US sanctions with a native currency, the bolivar, that has declined 97%  in value against the US dollar over the course of 2017.

“The 21st century has arrived!” Maduro announced to fan fair in a December 3rd broadcast where he initially announced the plans.  In the broadcast, he stated that the petro will help Venezuela “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”  Maduro hopes to use the coin to pay off its international debt and to repay government bonds.  

The Venzuelan government hopes to issue the currency within the coming weeks.