Bank of Russia Rejects Provision of Crypto-Related Financial Services

The Central Bank of Russia (CBR), well-known for its strict stance on legalizing cryptocurrencies, rejected a request by members of financial sector to allow the provision of crypto related services. During a meeting with industry representatives, the regulator made clear its position. The purpose of the meeting was to discuss the prospects of the Russian stock exchange’s development.

A announcement has been published by the financial industry. It states that they asked whether crypto investments could be allowed in the Russian Federation. The monetary policy regulator responded to their suggestion by stating:

Bank of Russia says that the provision of services by financial institutions related to crypto assets and derivatives on these assets is not in investors’ best interests and poses great risk.

Further, the press release reveals that the central banking has turned its back on industry’s request to expand the practice for issuing Russian financial instruments in foreign currency.

Bank of Russia has maintained a conservative position regarding the Russian ruble’s status as the sole legal tender in Russia. It wants it to be preserved. The CBR is against allowing bitcoin to circulate freely and their use in payment.

The Russian monetary authority has used the term cryptocurrencies as money substitute, which is illegal under Russian law. The monetary authority is also developing and issuing its own digital ruble. Trials are expected to start as soon as January 2022 after the platform’s prototype has been completed by the end this year.

Although cryptocurrencies are only partially regulated by the law “On Digital Financial Assets”, which was in force in 2021, they have become a popular investment option. CBR survey results have shown that cryptos, and other alternatives assets make up more than half of the portfolio of nonqualified Russian investors.

Bank of Russia advised national stock exchanges in July to stop trading financial instruments linked to crypto assets or their prices. The authority stated that listing them ‘entails increased losses for people without sufficient experience and knowledge’.

The bank insisted that asset managers shouldn’t include cryptocurrency in mutual funds, and asked brokers and trustees not to offer ‘pseudo derivatives’ with such underlying assets unqualified investors. Russian legislators are looking at restrictions for the crypto funds that private investors can put in.