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Tuesday, March 28, 2023

Bank of Russia Says Stablecoins Are Not Suitable for Settlements

Bank of Russia Says Stablecoins Are Not Suitable for Settlements – Stablecoins are not meant for settlements, either nationally or internationally, according to the Central Bank of Russia (CBR), in contrast to the Ministry of Finance. The monetary authority stated that because the underlying assets do not belong to the holder, the creation and usage of private stablecoins are fraught with risk. 

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It elaborated, as reported by the cryptocurrency news outlet Bits.media:

“The price of a stablecoin is not genuinely stable, and redemption at the nominal value of the assets used as collateral is not guaranteed.”

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The regulator made a comment in response to a recent statement made by Ivan Chebeskov, head of the Financial Policy Department of the Ministry of Finance, in which he pledged Minfin’s support for the growth of stablecoins in Russia. The senior official highlighted that when it comes to regulating digital currencies, the ministry is siding with Russian business.

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We will always support such initiatives, Chebeskov said at the Russian Creative Week forum, “if there is a need for companies and investors to pay or invest in a new way, if they need such a tool because it reduces costs, works better than previous instruments, and if the risks associated with it can be limited.”

Andrey Voronkov, the founder of Voronkov Ventures, pointed out that there are currently no blockchain-based, Russian ruble-pegged stablecoins at the panel discussion “The Impact of Web3 – New Era of Internet of Trust?” They ought to be created, in his view, because stablecoins tied to the dollar help to strengthen the U.S. fiat currency. Chebeskov refused to speculate on the potential release date of a stablecoin pegged to the ruble.

The creation of a stablecoin backed by gold for use in international transactions, according to experts at the VEB.RF national economic development institution, would assist to lessen the strain from Western sanctions, they asserted in June. Their recommendation came after Vladimir Gutenev, the chairman of the State Duma Committee on Industry and Trade, said in January that Russia might allow the usage of stablecoins backed by gold.

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A digital version of the country’s fiat currency has been actively being developed by the Bank of Russia in the meantime. According to first deputy governor Olga Skorobogatova, the CBR is prepared for extensive tests of the digital ruble, both nationally and in foreign trade transactions.

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