Russia's Central Bank Continues Digital Ruble Pilot Program, Renews Crypto Ban

Russia’s central bank said recently that it started a pilot phase of the digital ruble, its planned central bank digital currency (CBDC). Regulators say it must be a replacement for Russians’ cryptocurrencies, which should be banned altogether.

Three banks are already supporting customers in pilot transactions using existing mobile banking apps, as well as gateways for exchanging rubles from customer accounts into digital versions, according to an announcement posted on the Russian central bank's website on Tuesday. Nine more banks are upgrading their tech stacks to join the pilot soon, the report said.

Meanwhile, the Central Bank of Russia reiterated its call for a total ban on cryptocurrencies. According to Forbes, the Russian regulator sent its objections to cryptocurrency regulation to the Ministry of Finance, which had earlier proposed allowing regulated cryptocurrency purchases through licensed Russian banks. This approach was later detailed in a cryptocurrency regulatory roadmap published by the government.

Russia’s central bank said in its letter that allowing non-accredited investors to trade cryptocurrencies through banks would create “the illusion of government protection,” while encouraging people to participate in a “de facto Ponzi scheme,” Forbes wrote. The Central Bank of Russia stated that the government will not be able to fully control cryptocurrency transactions, and the cryptocurrency industry will not really benefit the Russian economy.

The Russian government responded to the bank’s call for a ban in January, publishing a roadmap for Russia’s cryptocurrency regulation shortly after. The Central Bank of Russia is listed as a participant in the discussions, however, recent statements suggest that it never really agreed with the idea of legalizing cryptocurrencies. Earlier this year, Russian President Vladimir Putin called on the central bank and government to find common ground.

Forbes reports that Russia’s central bank plans to push a bill to amend the 2020 law on digital assets to ban the issuance, trading, and publication of information about such services. Banks and communications providers will have to block transactions with individuals known to be involved in cryptocurrency-related businesses. Financial organizations are also not allowed to own cryptocurrencies.

Russia’s Ministry of Finance is preparing to introduce a bill on regulating cryptocurrencies by February 18, TASS reported.

The digital ruble project was first launched in October 2020, and the Russian central bank previously committed to creating a prototype by the end of 2021 and a pilot in early 2022.