Ethereum-Based Crypto-Ruble Token Development in Russia

Ethereum-Based Crypto-Ruble Token Development in Russia

Russia is trying to explore all possible means to circumvent the Western sanctions imposed after the invasion of Ukraine. Developers are working tirelessly on a "crypto ruble" to improve the Russians’ access to global exchanges and cross-border payments. Defi platform Indefibank, which is managing the project, has revealed the token will be pegged to the national fiat but remain independent from a state-issued digital ruble.

Crypto-Ruble for International Settlements

Russia is keen to launch a "tokenized crypto ruble" on the Ethereum blockchain, the CEO of decentralized finance (defi) banking platform Indefibank, Sergey Mendeleev, announced during the Blockchain Life 2022 Conference.

The plan is to issue the token through a decentralized smart contract with excess collateral or based on the model employed by the DAI stablecoin, the executive explained. Its exchange rate with the Russian ruble will be 1:1, as reported by the crypto news portal Forklog. Mendeleev further elaborated:

"A user can either independently issue a crypto ruble by placing sufficient collateral in the form of stablecoins or cryptocurrency on the balance of a smart contract or purchase it from an authorized exchange for fiat."

The total supply will directly depend on the amount of collateral. Indefibank estimates the size of the potential market among private individuals at between 5 and 10 billion rubles (approximately USD 82 to USD 160 million).

The crypto ruble developers expect other members of the crypto community to join the initiative and see the project becoming an independent decentralized autonomous organization (DAO) in the future. The crypto ruble will be a payment tool unrelated to the Central Bank Digital Currency (CBDC) created by the Bank of Russia.

Russia’s Central Bank, which recently agreed that the country would need cryptocurrencies to circumvent sanctions, vowed to promote its digital ruble in foreign trade. The regulator also made it clear that discussions are not about allowing domestic crypto payments and expressed doubts about the need to legalize private digital currencies.

Indefibank’s CEO said that Russian law does not require the establishment of a DAO and the issuance of ERC20 tokens to be coordinated with the central bank. However, if the monetary authority objects to the use of the word "ruble," the company is ready to change the name of the crypto.

The crypto ruble will make it easier for Russians to access global exchanges and settle with foreign trading partners, Mendeleev said. The token’s developers have already prepared an MVP, the report reveals, with the presentation of the final product expected in October.