Russia C-Bank Deputy Governor Says Blockchain Technology Is Still Immature

The blockchain technology is still immature and needs a lot of work, but can be very useful, according to Olga Skorobogatova.

by Nina Dimitrova
29 May • 2 mins
In Regulation

The blockchain technology is still immature and needs further development, said Bank of Russia’s deputy governor Olga Skorobogatova.

According to a report of the Russian economic information agency Prime, Skorobogatova told the Saint Petersburg International Economic Forum that took place last week, that the blockchain technology is not widely used, besides in the cryptocurrency segment and there is no point in implementing the technology for technology’s sake.

“There are no industrial solutions for the use of the distributed ledger technology (DLT) yet, besides for bitcoins and other cryptocurrencies,” Skorobogatova said. “The main reason is not that it is not mature enough, and it is indeed immature, but that it needs further development, particularly with regard to security and scalability.”

Yet Skorobogatova does not exclude the possibility to use the blockchain technology. She noted that in general there are two main types of blockchains – for online financial transfers, such as the platforms Ripple and Corda, and for smart contracts and offline use, such as Ethereum and Hyperledger.

According to Skorobogatova, the business has not yet grasped the value of using the DLT technology. “There is no point in using technology for technology’s sake,” she said.

Skorobogatova’s words come in line with the official stance of the Bank of Russia on blockchain technology and cryptocurrencies in general, even thought the position on the latter has been quite contradictory at times. A few years back Russia’s c-bank, which also acts as a megaregulator of all things financial, was very suspicious of cryptocurrencies and at some point even had the idea of outright banning them.

Later the stance changed and Russia’s president Vladimir Putin even suggested the creation of state-issued cryptocurrency, the “cryptoruble”, whose main purpose would be to avoid the international sanctions against Russia. The idea is very much similar to that of Venezuela’s president Nicolas Maduro and the Petro.

Putin also hinted at introducing cryptocurrency regulations in Russia. Earlier this month, the lawmakers started drafting cryptocurrency legislation.

Yet, all along, the Bank of Russia has maintained that the underlying DLT technology can be very useful and set up a lab examining the possibilities. In April, Skorobogatova revealed the central bank was examining the DLT technology to facilitate cross-border payments with former Soviet republics.