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(Kitco News) - Russia has announced that it is abandoning its plans to create a national cryptocurrency exchange and will instead move to establish rules governing the use of cryptocurrency exchanges for cross-border transactions.
According to a report from Izvestia, Anatoly Aksakov, head of the State Duma committee on the financial market, announced the change in strategy and said the government will instead focus on establishing new rules and restrictions for the country’s private cryptocurrency exchanges.
“Exchanges will be used to conduct cross-border settlements, including bypassing sanctions restrictions, so new restrictions may be introduced against them,” Aksakov said. “At the same time, other organizations will constantly be able to appear, and the main thing is that they comply with the rules.”
The creation of a national cryptocurrency exchange was first proposed in November but was met with a lack of support from authorities, including Russia’s Ministry of Finance. This has led to the idea of facilitating cross-border transactions using private cryptocurrency exchanges that are heavily regulated.
“The Ministry of Finance did not support the establishment of one national crypto-exchange, rather there was an idea to legally regulate the possibility of creating such sites by business,” said Ivan Chebeskov, director of the financial policy department of the Ministry of Finance of the Russian Federation. “The department believes that digital currencies should be comprehensively regulated.”
As part of the pivot away from a national crypto exchange, the Ministry of Finance will also work to help new exchanges get established so they can provide a workaround to the sanctions Western nations have placed on Russia for its invasion of Ukraine.
Aksakov said that the Central Bank of Russia (CBR) will be tasked with regulating cryptocurrency exchanges interested in facilitating cross-border transactions, and the rules will be included in the draft law on experimental legal regimes currently being developed.
The CBR also reached a compromise to make cryptocurrency mining legal in order to make it possible to conduct international settlements and exchange operations with cryptocurrencies within the experimental legal regime, Chebeskov said.
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While the CBR has repeatedly expressed its disapproval of “private cryptocurrencies” such as Bitcoin, it began allowing them to be used by companies and individuals in September to settle cross-border transactions after Russian banks were cut off from their foreign counterparts.
On April 20, members of the Russian Duma submitted amendments to the law on experimental legal regimes in the field of digital innovation which allow the Central Bank to create an experimental platform for the use of cryptocurrencies and digital financial assets (DFA) in international settlements.
“It is still premature to talk about stock exchanges in the classical sense of the word,” said Alexei Guznov, deputy chairman of the Bank of Russia. “Most likely, these will be organizations that will help in the interaction between exporters and importers and in cross-border settlements in digital currencies. Through them, Russian companies will be able to pay, for example, for parallel imports.”
According to Oleg Ogiyenko, Director for Government Relations at BitRiver, market participants have thus far supported the decision to establish comprehensive rules for cryptocurrency exchanges in lieu of creating a national cryptocurrency exchange. The move is expected to help minimize the risks of sanctions and cyberattacks on key infrastructure, and prevent abuse by dominant players in the market.
This latest development is expected to result in trillions of rubles worth of transactions, according to Evgenia Burova, director of communications at the Garantex cryptocurrency exchange. “Now there are many countries where legal entities and individuals are able to accept payments in cryptocurrencies,” she said.
