The Bank of Russia says no to financial services related to cryptocurrencies

The Central Bank of Russia, known for its uncompromising stance on the legalization of cryptocurrencies, has rejected a request from members of the financial sector to authorize the provision of cryptocurrency-related services. The regulator announced its position during a meeting with industry representatives, held to discuss the prospects for the development of the Russian stock market. According to a recently released announcement, financial firms have raised the issue of allowing crypto investments in the Russian Federation. Responding to their suggestion, the monetary policy regulator stated that according to the Bank of Russia, the provision by financial institutions of services related to transactions with crypto-assets and derivatives on such assets does not satisfy the interests of investors in the financial market and involves great risks. The press release also 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.

The Bank of Russia has consistently maintained a conservative view of the Russian ruble's status as the only legal tender in the country it wants to preserve. The CBR remains opposed to allowing the free movement of bitcoins and the like, as well as their use in payments. The monetary authority has often referred to cryptocurrencies as "money surrogates" which are prohibited under current Russian law. It is also working to develop and release its own digital ruble with trials expected to begin as early as January 2022, following the completion of the platform prototype by the end of this year. While cryptocurrencies remain only partially regulated in Russia through the "On digital financial assets" law, which came into effect in early 2021, their popularity as an investment option has grown significantly. The survey results published by the CBR showed that cryptocurrencies and other alternative assets make up more than half of the portfolio of unskilled Russian investors. In July, the Bank of Russia advised national exchanges to avoid trading in financial instruments related to crypto-assets and their prices. Their listing "involves an increase in the risk of losses for people who do not have sufficient experience and knowledge," warned the authorities. The bank also insisted that asset managers should not include cryptocurrencies in mutual funds and urged 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 can put into crypto.