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Ukraine Wants A National Digital Currency, Not Its Own Cryptocurrency

The National Bank of Ukraine (NBU) has said it is “considering” introducing a digital version of its national currency, the hryvnia, that is not based on Blockchain, at least for now.

The central bank reported in a Facebook post Thursday Jan. 11 that it is studying “new and innovative technologies” as part of the country’s so-called Cashless Economy project, of which the potential e-hryvnia is a part.

The NBU drew a distinction between the digital currency it has in mind and a state-issued cryptocurrency, which would by definition be based on Blockchain technology:

“However, the National Bank would like to specify that what is meant here is the possible introduction of an electronic hryvnia, not our own cryptocurrency.”

The NBU also noted that the possibility of basing their proposed e-hryvnia on Blockchain is still up for discussion.

The plans for a digital hryvnia versus a national cryptocurrency contrast with activities across the border in Russia, whose government has been flirting with the idea of a Blockchain-based CryptoRuble since 2015.

In addition, fellow CIS member Belarus has proclaimed its intention to become a cryptocurrency-friendly zone, facilitating easier regulated exchange and attracting foreign investment.

Meanwhile, Ukraine’s cryptocurrency scene made headlines for more nefarious reasons in December 2017. The sudden police raid of crypto journal ForkLog in Odessa was followed by the kidnapping of EXMO exchange director Pavel Lerner in Kiev. Lerner has since reportedly been released for a $1 mln ransom.

Ongoing regulatory moves by lawmakers this week have also seen the creation of a dedicated working group to investigate how Bitcoin and other cryptocurrencies should be treated under Ukrainian law.

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Putin Adviser Says ‘CryptoRuble’ Will Circumvent Sanctions, Government Remains Divided

At a recent government meeting, Sergei Glazyev, economic adviser to President Putin, said the ‘CryptoRuble’ could help alleviate the pressure of Western sanctions, The Financial Times reported Monday. However, there is still no unified official stance from the Russian government on the question of issuing a national digital currency.

The Russian CryptoRuble is essentially a digital ruble — a government-issued digital currency accepted as legal tender.

According to FT, Glazyev stated that a government-controlled cryptocurrency like the CryptoRuble would help Russia disregard Western sanctions:

“This instrument suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counterparties all over the world with no regard for sanctions.”

A divided front

Glazyev’s positive stance on the CryptoRuble is the latest position in the ongoing back and forth on the topic within the Russian government.

According to Russian news agency TASS, during a Dec. 28 meeting on legislation for digital currencies in Russia, government officials spoke negatively about the CryptoRuble.

Both the Deputy Minister of Finance Alexey Moiseev and first Deputy Governor of Russia’s Central Bank, Olga Skorobogatova, stated that they did not see a need for issuing a national digital currency.

However, in June 2017 at the St. Petersburg International Economic Forum, Skorobogatova held the opposite position, saying:

“We will definitely get to a virtual national currency, we’ve already started working on it.”

Not a new question

The Russian government has been publicly discussing the idea of a government-issued digital currency as legal tender as far back as 2015. Originally, Qiwi, a publicly traded Russian payment service provider, initiated the idea for a Russian national cryptocurrency called ‘BitRuble.’

The Russian State Duma has an official working group in place that looks at cryptocurrency risks and regulations. Though there have been reports about possible outright cryptocurrency bans in Russia in the past, the government’s official stance remains unclear, leaning toward regulation of digital currency use.

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Russia: Tinkoff Bank Is ‘Almost Ready’ To Issue ‘TinCoin’ Cryptocurrency

The founder of Russian bank Tinkoff Oleg Tinkov has said he wants to create his own cryptocurrency because he fears “losing pole position.”

In a post on his Facebook page over the weekend, Tinkov, whose bank has claimed huge numbers of customers through its more relaxed card terms, said the “time was right” to release the dedicated ‘TinCoin.’

“I have a feeling pole position technologically is slipping away from us right before our eyes,” he wrote.

“Time to release TinCoin… What do you think? We’re almost ready.”

Tinkov gave no further details as to the nature or function of TinCoin, but a release would be the first of its kind for a Russian bank as the state continues to develop the so-called ‘BitRuble’ together with the central bank.

Commenting in response to users on Facebook, Tinkov said in a typically ironic style that his institution “out of principle does not compete with state banks.”

Nonetheless, Tinkoff is a firm participant in the cross-sector Russian FinTech Association, which aims to explore and further the use of disruptive technologies such as Blockchain.

Other members include major state players Bank of Russia, Sberbank and VTB, along with periphery providers such as the QIWI electronic wallet platform.

Meanwhile, Russia’s official stance towards cryptocurrencies beyond the BitRuble remains contradictory. Various ministers continue to give contrasting information about how authorities wish to restrict access to Bitcoin to ordinary or “non-qualified” investors. 

The difference in opinion between cryptocurrency and Blockchain meanwhile continues to widen. One of the largest mobile telecoms providers in Russia, Megafon, announced today it had used the technology to distribute bonds worth 500 mln rubles ($8.6 mln).