Russia’s central bank has voiced opposition to the provision of financial services related to cryptocurrencies. Because they pose a high risk, the monetary authority thinks such services would be detrimental to Russian investors.
Central Bank of Russia is unwilling to permit financial services for Crypto Assets
A call from members of the financial market to allow the provision of crypto-related service has been rejected by the Central Bank of Russia (CBR). CBR is well known for their hardline position on legalizing cryptocurrencies. At a meeting of representatives from the sector, the regulator made its position known to address the potential development of Russia’s stock market.
A recently released announcement states that financial firms raised the issue of crypto investments in Russia. The monetary regulator responded to them by saying:
Bank of Russia says that the provision of services by financial institutions related to crypto assets or derivatives of such assets is not in investors’ best interests and poses a risk to their reputation.
The press release further reveals that the central bank has also turned its back on the industry’s proposal to expand the practice of issuing Russian financial instruments in foreign fiat currency.
Bank of Russia maintains a conservative position regarding the Russian ruble’s status as the sole legal currency in Russia. It wants it to be preserved. CBR is opposed to bitcoin’s free circulation and their use for payments.
The monetary authority has often referred to cryptocurrencies as “money surrogates” which are banned under current Russian law. It’s also working to develop and issue its own digital ruble with trials expected to begin as early as January 2022, after the completion of the platform’s prototype by the end of this year.
While cryptocurrencies remain only partially regulated in Russia through the law “On Digital Financial Assets,” which went into force in early 2021, their popularity as an investment option has grown significantly. CBR has released survey results that show cryptos and alternative assets make up more than half of all portfolios of Russian non-qualified investors.
Bank of Russia advised stock exchanges in July to refrain from trading financial instruments linked to cryptocurrency assets or their prices. Their listing “entails increased risks of losses for people who do not have sufficient experience and knowledge,” the authority warned.
The bank also insisted that asset managers should not include cryptocurrencies in mutual funds and called on brokers and trustees to refrain from offering “pseudo-derivatives with such underlying assets to unqualified investors.” Russian lawmakers are considering restrictions on the funds private investors may put into crypto.
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