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Russia's Central Bank opens public consultation on stablecoins, NFTs and other tokenized financial instruments

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(Kitco News) - Russia’s Central Bank (CBR) is looking at different ways to incorporate digital financial assets (DFA) and blockchain technology into its domestic financial system, according to a report they shared on Telegram on Nov. 7 entitled Digital Assets in the Russian Federation.

The report explores various ways Russia could support the development of domestic DFAs and decentralized finance (DeFi), as well as the conditions under which “friendly” countries might participate in the issuance of new assets. The report’s authors provided recommendations through a series of proposals for public consultation.

For the purposes of the report, DFAs are defined as:

-Tokenized financial instruments – assets that exist in the form of tokens, granting certain rights to their owners and/or being a digital form of any asset;

-Collateralized stablecoins – digital assets that seek to support secure value by linking to various assets such as fiat currency, precious metals, or a basket of assets;

-Non-fungible tokens (NFTs) – digital assets with unique identification code recorded in a distributed ledger such as works of art, intellectual property, and digital media objects;

The report makes clear that it is not intending to consider the digital ruble currently under development, or “cryptocurrencies and unsecured (including algorithmic) stablecoins,” as these were addressed in detail in previous reports.

“The Bank of Russia supports the further development of digital technologies and private innovation projects, including those using distributed ledger technologies,” they write. “At the same time, the use of innovative technologies to create digital assets should not create uncontrollable risks for consumers of financial services, financial stability, cybersecurity, and also lead to violations of [Anti-Money Laundering/Combating the Financing of Terrorism] requirements.”

The document provides an overview of digital asset regulatory approaches around the world, including the EU, the United States, Switzerland, Germany, Brazil, Kazakhstan, and their close ally Belarus, as well as those of the Financial Action Task Force (FATF). Its authors noted that some regulate digital assets as digital versions of the traditional assets they resemble or represent, while others create new and distinct regulations to govern them.

The majority of the 33-page report is devoted to proposing various ways to regulate DFAs within Russia, or to harmonize DFA regulations with the country’s existing financial regulatory framework.

At the end of the report, a list of 20 questions was provided to help guide the consultative process. Recommended questions include whether the list of assets that can be tokenized should be expanded, if there is support for the circulation of digital rights in organized auctions, which terms of smart contracts should be standardized, and whether it is necessary to introduce mandatory disclosure requirements for digital rights issuers.

The CBR has already declared its intention to roll out the digital ruble in 2024.

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