In a recent blockchain conference, Ivan Chebeskov, the head of the Financial Policy Department of the Russian Ministry of Finance, advised citizens against investing their savings in cryptocurrencies.
With interest in foreign fiat currencies declining due to restrictions on foreign currency accounts and operations amid Western sanctions, Chebeskov stated that cryptocurrencies are high-risk assets unsuitable for most people’s savings. He emphasized that even stablecoins pegged to traditional currencies are not ideal for savings as they do not accrue interest. Instead, Chebeskov proposed regulated digital financial assets (DFAs) as a better alternative: tokens issued on a licensed blockchain platform under Russian law. The Bank of Russia expects significant growth in the DFA market.
According to Anatoly Popov, deputy chairman of Sberbank, around 13 million Russians, approximately 9% of the population, currently hold cryptocurrencies, with 1 million active users. However, Chebeskov believes cryptocurrencies are more suitable for wealthier individuals, constituting only a portion (10-15%) of their available investment capital. The government’s warning reflects concerns about the risks associated with cryptocurrencies and the preference for regulated alternatives for mainstream adoption.
Russia shifts focus to regulating crypto trading platforms
The Russian government has abandoned its plans to create a national cryptocurrency exchange and is redirecting its efforts toward establishing a regulatory infrastructure for crypto trading platforms. The new approach aims to minimize the risk of further sanctions and promote competition in the crypto market. The Ministry of Finance has reportedly agreed to this shift, and the responsibility for regulating the country’s crypto trading platforms will likely be assigned to the Central Bank of the Russian Federation.
The idea of a national crypto exchange, initially proposed in November 2022, faced criticism, leading to reconsidering its implementation. Instead, the focus will be on implementing regulations to monitor the development and operations of existing crypto trading platforms. This regulatory framework will provide oversight and transparency in the crypto market while safeguarding against potential risks.
Russian plans for digital assets in cross-border payments
Russia is exploring using digital assets for cross-border transactions to overcome the challenges posed by sanctions and the limited use of euros and dollars for payments. A draft law published by the parliament of Russia aims to facilitate the use of digital financial assets (DFA) and cryptocurrencies for cross-border payments, primarily for exporters. By swapping assets or tokenizing precious metals and other assets, Russia aims to mitigate foreign exchange risks associated with transactions settled in foreign currencies.
In addition, the Bank of Russia has acknowledged the inevitability of cross-border payments in cryptocurrency, particularly in the current geopolitical climate. The central bank and the finance ministry are working towards legitimizing cross-border crypto payments in the future.
Furthermore, the development of Russia’s digital ruble platform includes mechanisms to support interactions with other central bank digital currencies (CBDCs). Various models for CBDC interaction are currently being evaluated to ensure seamless communication with other state-issued digital currencies.
By shifting its focus towards regulatory infrastructure and exploring the use of digital assets in cross-border payments, Russia is navigating the evolving landscape of cryptocurrencies and blockchain technology while addressing the concerns surrounding financial stability and compliance with international regulations.
In conclusion, the Russian government’s cautious approach to cryptocurrency savings and its commitment to implementing robust regulations reflect its efforts to balance innovation and risk mitigation in the financial sector.
The developments discussed during the blockchain conference and the focus on regulatory infrastructure and cross-border payments demonstrate Russia’s determination to navigate the evolving digital landscape and harness the potential benefits of blockchain technology while ensuring financial stability and compliance with international standards.