Igor Yusufov proposes oil-backed cryptocurrency

Russia’s former minister of energy believes it is a smarter alternative to CryptoRuble

While the Russian government is working to adopt long-awaited legislation on digital assets industry, another national cryptocurrency is being developed. Unlike previously discussed CryptoRuble, this one is supposed to be backed by oil.

Former Russian Minister of Energy Igor Yusufov is working on an oil-backed cryptocurrency, which may benefit from a new set of cryptocurrency regulations from the Russian government, says Finance Magnates. According to Yusufov, the project is in the final stage of development.

Earlier, Russian officials stated that the country could launch CryptoRuble, a non-mineable cryptocurrency pegged to the ruble. However, the ex-minister considers an asset-backed cryptocurrency to be a smarter alternative to such ''national cryptocurrency'' backed by a fiat. ''The creation of private and national energy cryptocurrencies based on national currencies does not make economic sense,'' he said in an interview.

At the same time, compared to traditional currencies, the oil-backed alternative hypothetically allows ''to avoid [...] the unpredictability of exchange rate fluctuations, the commission for currency exchange [and] trade restrictions''. Yusufov also implied that his project would not be specific to Russia but could extend throughout the OPEC region. ''Such a union in [the countries'] own interests will be not only logical but also economically justified,'' he said.

Russia's Federation Council and State Duma have to adopt the regulations during the spring session of 2019. Photo: kremlin.ru

The oil-backed cryptocurrency can also decrease the influence of the US economy on Russia, considers Managing Partner at SMC Capital John Slyusarev, adding that Venezuela created it's Petro for the same reason. The Kremlin also considers the use of cryptocurrency as a way to evade international sanctions. ''This instrument suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counterparties all over the world with no regard for sanctions,'' claimed Sergey Glazyev, an economic advisor to President Putin, at a meeting in December 2017.

Meanwhile, President Putin has ordered the government to enforce crypto-related regulations by 1 July. Russia's Federation Council and State Duma (the lower house of the Federal Assembly of Russia) have to adopt the regulations during the spring session of 2019. According to member of the State Duma Committee on Economic Policy Oleg Nikolayev, the new regulations intended to support the development of the blockchain and cryptocurrency industries in Russia are in the ''final stage of development''.

By Anna Litvina