Nikolai Nikiforov, Russian minister of Communications and Mass Media, revealed details of a recent meeting where Putin and Moscow's political elite discussed the prospects of Russia issuing its own cryptocurrency, dubbed the "Cryptoruble." The Cryptoruble would potentially be introduced in 2018. Nikiforov was confident that the Cryptoruble would be adopted for "one simple reason: if [Russia] do not, [their] neighbors in the Eurasian Economic Community will do it in 2 months."
However, Nikiforov was careful to add that this should not be seen as an effort to legalize decentralized cryptocurrencies like bitcoin. Russia has generally been suspicious of cryptocurrencies, and indeed, Nikiforov recently said that "bitcoin is a foreign project...Russian law will never consider bitcoin as a legal entity in the jurisdiction of the Russian Federation."
The Cryptoruble would ultimately be a legal tender in Russia, and owners would therefore incur personal income taxes on the cryptocurrency. According to Russian officials, the state-issued cryptocurrency will use blockchain technology, but it will not be mined and will instead be issued and tracked like any other currency. This could be because at an earlier meeting President Vladimir Putin made a statement warning top financial officials of the serious risks that cryptocurrencies bear as a result of mining. These contradictory statements issued by the President are a result of Russia's efforts to diversify the nation and move away from its reliance on the oil and gas industry and towards a more digital economy.
To many, the entire point of cryptocurrencies such as bitcoin is free commerce and a lack of regulation, and for that reason the Russian government may encounter some backlash as it tries to take control of a decentralized currency. The fact that it will be run by blockchain technology can still help prevent online fraud and give it at least the semblance of being decentralized.
Upon exchange of Cryptorubles for rubles, owners will need to present proof of origin, such as documentation of a transaction or rendered service. This will help deter money laundering and currency manipulation, but instead of putting a full stop, the government will simply levy a 13% tax on untraceable CryptoRubles.
Currently, there is not much information regarding Russia's new cryptocurrency, but it is definitely something to keep an eye out for.