The future of banking in Russia could see a significant shift towards crypto, according to Russian lawmaker Anatoly Aksakov.
Aksakov, the head of the State Duma Banking Committee, said the digital ruble, along with advancements in blockchain technology, could eventually make traditional banks obsolete, a local media outlet reported.
Russia has recently launched the digital ruble, the country’s own central bank digital currencies (CBDC). Currently, the digital ruble is in a pilot phase and is being testing in collaboration with several banks.
“As for the role of banks, I think that their role will fade in the future with the development of blockchain,” Aksakov said at the AiF.Media club.
However, as of now, there are no official plans in Russia to phase out traditional banks.
The digital ruble
Russian law introduced the digital ruble on 1 August with the Bank of Russia now testing the currency. The national central bank is directly managing the digital ruble’s infrastructure and is responsible for the asset.
Currently, Russia’s CBDC is to be used only for payments and money transfers, rather than investments.
Aksakov noted that the Central Bank has set a daily transaction cap at 200,000 rubles for the digital currency.
As of now, the digital ruble doesn’t support features like deposits or loans. However, Aksakov believes these restrictions might be relaxed in the future.
“My personal opinion is that after some time we will make a decision that deposits can be placed in the information system of the Central Bank and loans can be issued, since life requires it. Because it will be faster and, perhaps, more efficient,” he said.
Similar to decentralised finance, Aksakov said that these decisions on loans could eventually be made by a robot as a person is not needed.
Growing focus on CBDCs
With the rise of cryptocurrencies, blockchain technology has gained traction among institutions. This has prompted many countries, including Russia, to explore the potential of CBDCs.
However, central banks worldwide are cautious about the implications of CBDCs on the traditional banking system.
A report from The European Money and Finance Forum suggested there were potential risks. A CBDC system without any restrictions could lead to significant shifts of funds from commercial banks, which would increase financial stability risks.
Challenges in Russia’s crypto landscape
While the digital ruble is making strides, the broader crypto environment in Russia is struggling.
Recently, Binance, the world’s largest cryptocurrency exchange, revealed it was considering a “full exit” from Russia. This move comes amidst growing concerns that the platform was allowing Russian investors to evade US sanctions.
The US, European Union, UK, and various other countries imposed sanctions following the Ukraine invasion in February 2022.
Lawmakers are calling for tighter regulations on crypto platforms operating in Russia after sanction evasion fears.
US Senator Elizabeth Warren recently urged the Department of Justice for an investigation into potential sanction evasions by Russians via Binance. She expressed her concerns on X (formerly Twitter), emphasising the need for “stronger crypto regulations to rein in illicit finance”.
Binance introduced measures to limit Russian users of the exchange in April 2022, soon after the war began. Russian users and businesses faced restrictions. For example, accounts with over $10,900 were only allowed to withdraw.