On Thursday, June 7th, a report was released from Russian Analytic Credit Rating Agency (ARCA), which states that cryptocurrency cannot be utilized as a means of payment yet.
As indicated by ARCA, cryptocurrency “does not currently fully perform any of the functions of money” as the exchange rate instability is too high – practically the same with the unpredictability of food prices – to enable it to be proficient as payment.
The report also takes note of that the utilization of crypto “does not yet reduce transaction costs in the economy” because of its “energy inefficiency […] lack of economies of scale in the provision of cybersecurity [and] the low speed of entries in the register [blockchain]:”
“All of these factors lower the value of the potential advantage, which is the reduction in the number of intermediaries in settlements (of banks).”
ARCA writes that a correlation of crypto with fiat currencies with “their own intrinsic value” features how cryptocurrency’s market worth is “formed mainly on expectations of investors’ readiness to sell it in the future at a higher price.”
The elements that could expand the utilization of cryptocurrency, “toughening of sanctions against the backdrop of growing foreign policy and external economic tensions.” According to ARCA.
Recently, during his yearly live question and answer with the people, Russian president Vladimir Putin talked vaguely but basically talking bad about digital money.
Nonetheless, Putin noted that Russia will investigate how they can utilize digital money to “avoid any restrictions in the field of international financial activity,” which could have been a reference to evading the Western sanctions currently forced on the nation.
The ARCA report closes the digital currency used in the future of Russia is probably not going to end up widespread due to the fairly tough approach to regulation by the Central Bank of the Russian Federation, high investment risks, an inadequate number of companies ready to accept payment for their goods and services in cryptocurrency, […] and lack of guarantees for the safety of funds inherent in traditional money.”
Russia’s major crypto and blockchain-related bill, “On Digital Financial Assets,” was collectively affirmed during its first reading toward the end of May in the State Duma. The last form of the crypto regulation legislation is set to be passed by July 1.