A number of Russian banks are planning on participating in the pilot phase of the digital ruble project, and already a few of them have already begun testing transactions with this new currency. Bank of Russia has invested heavily in developing the next generation of bank services and plans to increase its range of operations in the future.
The Digital Ruble pilot initiative now has 12 participants.
The Central Bank of Russia (CBA) built on a prototype of the digital ruble platform in December and is now beginning to experiment with advanced technological solutions. CBD plans to authorize a variety of banks into the first stage of a pilot that will soon more than five hundred. The CB plans to expand the range of participants gradually. Russian banks are finally preparing to begin testing the Central Bank Digital Currency (CBDC) in light of recent developments. Promsvyazbank, one of the country’s largest banks, has already begun testing the new payment system.
Khrustalev said after the customer-to-customer and business-to-business transactions, Bank of Russia would begin the technical testing of C2B, B2C, and B2B payments. Based on the pilot results, the Bank of Russia plans to introduce the digital ruble platform into commercial trial.
Tinkoff Bank is also conducting efforts to test out the digital version of the Russian ruble. “Tinkoff Bank plans to begin testing the digital ruble practice soon,” a statement from the online neobank read. Tinkoff Bank recently launched into the digital domain by acquiring an more than half of the fintech star’s stock.
VTB Bank is another prominent Russian lender headquartered in Moscow, which announced its commitment to be a pilot client of the digital ruble. “Piloting starts with the digital ruble platform and embedding services such as establishing an electronic wallet via a mobile app and transferring the digital ruble between individuals,” the bank’s press statement highlighted.
Vadim Kopysov, SVB Bank’s chief innovation officer, believes that the advent of the digital ruble will create new national payment services for citizens and small businesses. Speaking with Tass, he explained:
The digital ruble will give an additional impetus to the creation of offline cashless payment services for businesses in the absence of Internet access at a point of sale, which is very important given the geography of the Russian Federation.
The Bank of Russia has been taking a tough stance regarding cryptocurrencies and has been contemplating a digital ruble in recent years, formulating a plan in 2020 for the possibility of issuing CBDCs. Karpatbank, Alfa-Bank, Sberbank, Dom.rf Bank, Gazprombank, Keneny, Rosbank, Avtosberbank, and Telectrobank fronted the first round of the pilot. The Federal Treasury, in conjunction with commercial brokers, will participate with the second stage of consumer-to-business transactions (С2B), business-to-business (B2B) and business-to-government (B2G) exchanges.
With the growing interest for digital currencies, a central bank-backed cryptocurrency was on the horizon, and the first round of the pilot was successful. Karpatbank, Alfa-Bank and Sberbank became the first to accept deposits in Bitcoin and other cryptocurrencies. The Russian government has now created a task force on digital currencies. The task force will include representatives of the government, the Central Bank of Russia, Rosfinmonitoring, and other financial regulators. It will examine regulations and legal issues related to cryptocurrencies and digital currencies.
In July 2015, Russia was ranked second in the world in terms of the number of bitcoins traded. It is reported that there were 20 million bitcoins traded in Russia compared to the 15 million bitcoins traded in the United States. In an October 2015 speech, Russian Prime Minister Dmitry Medvedev stated that the Russian government would support the adoption of Bitcoin as a payment method.
In October 2017, the Russian Finance Ministry announced it would create a task force to regulate cryptocurrencies. The task force was announced amid the 2018 crash of the price of Bitcoin.
Regulation
On 26 February 2019, the Government of Russia issued a new set of guidelines related to cryptocurrencies. The guidelines stated that “no private person can issue cryptocurrencies, and only a state-controlled organization can do so”.
Bottom Line
Russia has been in a long process of transitioning from a cash-based society to a digital one, and the Russian banks are beginning their first tests of digital ruble payments. Vnesheconombank issued a statement Monday stating that they have launched “a test operation on the use of so-called “digital rubles” in transactions.”