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Russian Federation’s industrial conglomerate company Rostec is planning to cut back on its spending on blockchain by at least 50%, Cointelegraph reported citing local news outlet Kommersant.
Based on Rostec’s roadmap, the state-backed firm is now planning to invest 28.4 billion rubles ($453.2 million) on blockchain technology development by 2024. To put things in perspective, Rostec initially planned to spend 55 billion ($877.8 million) to 85 billion rubles ($1.3 billion) on the technology.
As per the details, the company estimates that introducing blockchain technology in the product labeling system will cost 659 million rubles ($103 million). Meanwhile, it will require 1.17 billion rubles ($18.6 million) for healthcare system, 575 million rubles ($9.1 million) for pharmaceuticals tracking system and 475 million rubles ($7.5 million) for housing and utility services.
Rostec’s decision to downgrade its blockchain investment is probably due to the macroeconomic situation. The company’s spokesperson revealed that the perspective about the technology changed. Some are concerned with the lack of development strategy and certain market niche while others are choosing the path of “less risky development.”
The decision to cut back on the budget for blockchain technology development comes after Prime Minister Mikhail Mishustin ordered that the digital economy development be prioritized.
Meanwhile, the Bank of Russia told RIA last month that cryptocurrencies carry significant risks and it supports the idea of banning the emerging asset class.
“In our opinion, private cryptocurrencies cannot be equated with fiat money and cannot be legal tender. If it is decided to ban cryptocurrencies as a means of payment at the legislative level, we consider it appropriate to support this position,” the central bank said.
The central bank, however, has started testing stablecoins – cryptocurrencies pegged to real assets – in its regulatory sandbox, Bank of Russia head Elvira Nabiullina told Interfax late last month. Nabiullina clarified that they are only exploring how stablecoins work and do not assume them to function as a means of payment or become an alternative to money.
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