Russia’s central bank intends to prohibit mutual funds from acquiring crypto assets or related financial instruments. After urging stock exchanges to refrain from trading securities related to cryptocurrencies, the regulator has now proposed a similar proposal.
Central Bank of Russia issues draft directive banning crypto investments in mutual funds
Central Bank of the Russian Federation (CBR), is taking measures to stop mutual investment funds from investing in digital currencies like bitcoin. Derivatives are also subject to restrictions, as their value depends on fluctuations in the rates of the securities that they hold.
The monetary authority explained the move with the need to protect investors’ funds and rights. This measure applies to both accredited and non-qualified investors. It will be introduced through amendments to the CBR directive “On the composition and structure of assets of joint-stock investment funds and assets of mutual investment funds” from 2016.
The Bank of Russia recently released the modifications for discussion. You have until December 27 to submit feedback or suggestions. Following warnings made earlier this year to asset managers about crypto assets not being included in mutual funds, the regulator presented new provisions.
In July, the CBR advised Russian stock exchanges to avoid the listing of instruments based on cryptocurrencies and recommended that brokers and trustees should refrain from offering “pseudo-derivatives with such underlying assets to unqualified investors.” Later, the authority stated it would not facilitate access to crypto for such investors and rejected the provision of related financial services.
However, poll results this month show that cryptocurrencies make up more than half the portfolios of qualified investors. Respondents to the survey indicated that 46% considered digital currency a potential hedge investment.
Media reports that Anatoly Ashakov was the head of Russia’s Financial Market Committee revealed that Russian lawmakers, which is the lower chamber of parliament, are considering restrictions on crypto investments. Moscow officials have discussed the possibility for some time.
Bank of Russia suggested an annual limit of 600,000. rubles, which is just over $8,000, in October 2020. They also solicited public opinions. Expectations at the time were that the limit would be incorporated into the law “On Digital Financial Assets,” which went into force in January, but that did not happen.
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