Russian central bank strips Bitcoin of money properties

Unlike central bank digital currencies (CBDCs), cryptocurrencies do not possess the key properties of money and cannot be used as a means of payment. This was stated by Deputy Chairman of the Bank of Russia, Alexei Zabotkin.

According to him, digital assets lack an issuer who would guarantee the reliability of their issuance and subsequent circulation.

“Cryptocurrencies are private digital tokens that can pass from one owner to another. But these private tokens do not possess the most important properties of money, namely the ability to be used as a means of payment,” said Zabotkin.

The regulator’s representative also questioned the prospects of cryptocurrencies as a store of value:

“They cannot be used as a reliable store of value because their price fluctuates very significantly from day to day, from month to month,” the deputy chairman of the Bank of Russia said.

Some technologies underlying cryptocurrencies could be used in the creation of the digital ruble, an alternative form of national money.

“The Central Bank ensures conversion of the digital currency into other forms of money at a 1:1 ratio and supports its value to the same extent as it ensures price stability for the national currency,” explained Alexey Zabotkin.

The plans to use the digital ruble as a means of payment were confirmed by the first deputy chair of the Bank of Russia, Olga Skorobogatova.

“Using the digital ruble as a unit of account when paying for digital assets or when purchasing is a completely normal operation, and, of course, it will be provided for,” noted Skorobogatova.

As a reminder, from January 1, 2021 a law “On DFAs” came into force in Russia, which defines “digital financial assets” and “digital currencies.” It recognises cryptocurrencies as property and bans using them to pay for goods and services on the territory of the country.

The possibility issuance of the digital ruble was considered by the Bank of Russia in an October report.

Subscribe to the ForkLog channel on YouTube.