“Creation of CBDC in Russia is a matter of time”, – Chairman of the Investment Russia Commission

CONTENT

  • Russia has taken a major step towards blockchain implementation

  • Creation of CBDC in Russia – a matter of time

  • DeFi market will develop in the world and in Russia

International consortium of news organizations developing transparency standards.

In 2020, Russia has taken a huge step towards blockchain technology. The country has laid the foundation for the further development of the sector and the integration of blockchain into the country’s financial sector. The BeInCrypto editors discussed the results of the year for the cryptocurrency industry with Nikolai Gadzhiev, Chairman of the Investment Russia Commission on Blockchain Technologies and Crypto-Economics.

Digital Currency Revolution for Central Bankers Part 1 of 2

Nikolay, 2020 is over. What has it become for the Russian cryptocurrency sector? What significant events took place this year?

N.G.: The overall impact of the COVID-19 pandemic on the global financial system has made it possible to rethink the approach to many things, including the blockchain economy. The growing sanctions pressure presupposes the search for new solutions to attract investment to Russia. The financial market for digital assets has turned from the fun of crypto enthusiasts into a real financial sector.  

These factors made it possible, in a more accelerated mode, on the part of state structures, to take up the formation of the legal field and the digital economy in the territory of the Russian Federation.. 

The War on Cash & Central Bank Digital Currencies (CBDCs)

One of the most important events of 2020 was the final determination of the general course of the state for the integration of blockchain technologies and digital financial assets into the general financial system of the country..

The basis for general integration was the adoption of the Federal Law of July 31, 2020 No. 259-FZ “On digital financial assets, digital currency and on amendments to certain legislative acts of the Russian Federation”. 

In 2020, Russia finally adopted in the third reading the draft law “On digital financial assets”, but instead of legalizing the circulation of cryptocurrency, lawmakers tried to “tighten the screws” as much as possible. How do you assess the impact of this document on the country’s cryptocurrency sector??

N.G.: The adoption of federal laws on the CFA has become one of the important steps in the formation of a regulated digital economy in Russia. Without a doubt, this step will allow integrating blockchain technology as a financial instrument into the entire Russian economy. State regulation will allow to bring the “gray” blockchain economy to a new level, creating a secure financial market attractive for businesses and government agencies.

Digital financial assets of citizens will be protected by the state, acting as a new legal form of property.

DeFi Market Decentralized finance (DeFi) is financial services built on blockchain technology that offer users access to an open, efficient and … More The first DeFi bank is going to open in Russia. How do you feel about such an initiative? And how important is DeFi for Russia?

N.G.: The DeFi market is quite interesting, as it provides indirect indicators of the real liquidity of digital financial assets and reduces the risks of high asset volatility. 

Difficulties with the use of DeFi systems in Russia will be associated primarily with the opacity of operations and the complexity of user identification. Therefore, the development of DeFi will be impossible in the classical form, in which it is now presented on the international blockchain market due to the inconsistency with the requirements of the emerging legal framework in Russia.. 

Today the governments of the countries of Europe, China, Japan, South Korea announce the creation of their CBDC Paper notes and coins may become a thing of the past due to a new financial instrument – the digital currency of central banks (CBDC). As of … More. How relevant is this topic for Russia and will we ever see the crypto-ruble?

N.G.: Creating your digital national currency is just a matter of time. The idea and work on the creation of this digital asset has been underway since 2019. After the completion of the creation of the regulatory framework in the digital economy sector, we will see official statements on the release date of the digital ruble. I can assume that in the territory of the Russian Federation its own CBDC will appear already in 2020.

See also: How Russia came to the digital ruble

Mining is one of the main topics in the community. Russia, due to its natural resources, could become the capital of cryptomining: cool weather and cheap electricity are what attracts miners from all over the world to Russia. What are the chances for Russia to overtake China and the United States in this matter??

N.G.: Classic mining in the form in which it is presented is a fairly energy-intensive form of production. In Russia, with the creation of a favorable legal environment for this type of activity, we will undoubtedly be able to see the creation of a rapidly growing industry, given the climatic resources and the rather low cost of electricity in Russia.

The Russian mining industry has great chances to become a leader in the world and overtake China and the United States, but future leadership directly depends on the general course of the state in regulating this industry, including creating tax conditions for conducting this form of production.

The world has embraced the trend of tokenization. Companies are trying to tokenize everything they can. Earlier, Norilsk Nickel and Sberbank announced a possible issue of tokens. How likely is it? And how profitable is it to issue tokens in modern realities?

N.G .: Tokenization The term tokenization has been around for quite some time. In the broadest sense, a “token” is a certain unit designed to represent a certain value within … More financial assets will become one of the trends in the global economy. The regulated token economy will become one of the important financial instruments, allowing the creation of a new area for asset growth for large companies. Perhaps over time, regulated tokens will completely replace “shares” as a speculative form, representing the assets of companies in the financial market. 

In Russia in 2021 we can no doubt observe “token” As the use of cryptocurrencies grows, new types of tokens appear. They can represent value or something intangible like voices. Two … More boom ”and the beginning of increased interest in this new form of attracting investment from Russian business.

How will the cryptocurrency market develop in 2021? What trends will be the main ones? Will the DeFi market, NFT tokens develop, or is it just a hype that will take place tomorrow?

Ripple and Central Banks Planning Final Wealth Transfer (XRP)

N.G.: Although the capitalization of the DeFi sector has already exceeded $ 15 billion and continues to grow rapidly, the DeFi segment will face a difficult future in Russia due to the complexity of user identification. It is possible to use hybrid systems that combine user indication and DeFi technology, which will unlock the potential of this technology in Russia.

The technology of NFT tokens is attractive, but has not yet found its active implementation to a sufficient extent. The technology itself is quite interesting and I think in the future it will probably receive wider use and implementation, as a technology that provides an individual marker for each individual DFA. 

The main trend in 2021 is the creation of Russian regulated digital platforms for transactions with digital assets, the creation of their own digital assets for large businesses and a large influx of private and corporate users into the blockchain economy. A decrease in the presence of companies outside the jurisdiction of Russian legislation on the blockchain market and a gradual increase in the mass of regulated Russian companies offering interaction with blockchain technologies.

In 2021, regulation by states will increase even more. In order to create national digital currencies, states will impose total control over third-party digital currencies. Great interest from governments in the blockchain industry will lead to the partial elimination of the existing gray market in the field of financial transactions.

To what extent have cryptocurrencies become more popular among Russians in general? Are you seeing an increase in interest among citizens and among companies?

N.G .: Cryptocurrencies have become an integral part of the mainstream, and interest in this financial asset will constantly increase. We can also observe a reduction in the operations of citizens on the CFA in Russia. This will be due to the difficulties in cashing assets when withdrawing funds to bank cards from international digital platforms. Also, the entry of the law on the CFA from January 1, 2021 imposes restrictions on the operations of citizens and will require full legalization of assets. 

It is possible to predict a more extensive popularization of digital assets in Russia closer to the summer of 2021, after the opening of the first digital platforms operating under Russian legislation and as a result of advertising campaigns for digital assets under the new legislation.

What will your organization do in 2021? What are the main plans, tasks, goals?

N.G.: The main task of the “Commission on Blockchain Technologies and the Crypto-Economy”, created under the auspices of the All-Russian Public Organization “Investment Russia”, is to actively interact with government regulatory bodies and specialized structures to develop a common approach to the formation and improvement of the digital economy.

Currently, the Commission includes some of the most significant representatives of the blockchain industry in Russia. At the moment, the “Commission on Blockchain Technologies and Crypto-Economics” is undoubtedly one of the most significant expert pools in the field of the Blockchain economy in Russia..

In November 2020, the Commission sent a number of initiatives to the Ministry of Finance of the Russian Federation to amend the federal law on the CFA. At the end of December 2020, the Commission sent a response to the Ministry of Economic Development of Russia on the federal law “On digital financial assets, digital currency and on amendments to certain legislative acts of the Russian Federation”, which considered issues of regulating the punitive part for using digital assets outside the law..  

In 2021, the Commission plans to interact more closely with government agencies by creating a regulatory framework for the functioning of the digital economy in Russia. It is planned to expand the composition and attract, for participation in the Commission, representatives of the Russian financial sector, key representatives of state structures of Russia and other countries in charge of the digital economy and blockchain technologies.

Thanks for the conversation!

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