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Russia's Central Bank still opposes cryptocurrencies for settlements
(Kitco News) -
Just three days after opening public consultations on different ways to incorporate blockchain technologies into its financial system, Russia’s Central Bank (CBR) has once again signaled that their minds are already made up when it comes to cryptocurrencies: “Nyet.”
Speaking in the State Duma, CBR Governor Elvira Nabiullina reiterated her hardline stance on cryptocurrencies in the country.
“Regarding crypto, we are in favor of the development of digital financial assets, and the digitalization of finance,” Nabiullina said. “But digital financial assets are not limited to crypto, to private cryptocurrencies. We have not changed our position that private cryptocurrencies - for which it is not clear who is responsible, or how responsible, which are opaque and carry high risks of volatility - should not be used in settlements.”
The CBR made a distinction between what it considers ‘good’ digital financial assets (DFAs) and ‘bad’ cryptocurrencies in the report which is intended to guide the consultations.
The central bank is willing to consider 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; fully 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; and 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 considering cryptocurrencies and unsecured (including algorithmic) stablecoins.
“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.”
One of the main differences between what the central bank considers DFAs and cryptocurrencies is that DFAs are regulated by a central system. This means that the issuer and the holder can be Russian legal entities or individual entrepreneurs, whereas cryptocurrencies are decentralized, meaning nobody can be held legally responsible under Russian law.
The CBR has already declared its intention to roll out the digital ruble in 2024, and it looks increasingly likely that its CBDC will be the only legally-recognized digital currency at that time.
