Bank of Russia Sees No Place for Crypto in Financial Market, Completes Digital Ruble Prototype – Finance

Ahead of presenting its comprehensive view on crypto regulations, the Central Bank of Russia has indicated that it sees no place for cryptocurrencies in the country's financial market. The monetary authority also announced that the prototype of the platform for its own digital currency had already been completed.

Bank of Russia publishes report on cryptocurrency

The Central Bank of Russia (CBR) is known for maintaining a tough stance on the issue of cryptocurrency legalization. The regulator intends to push for the adoption of rules for the movement of digital assets through legislative changes, deputy chairman Vladimir Chistyukhin said in comments to Russian media.

"I think we will solve the problem through legislative changes. There will be a more precise definition of how cryptocurrencies can be traded," Chistyukhin told reporters in the State Duma, the lower house of parliament.

The official noted that Russian citizens and companies have the right to purchase and hold cryptocurrency, but not through the country's financial infrastructure and intermediaries. He made the remark in response to a question about whether the CBR is in favor of banning transfers from Russian citizens' accounts to crypto exchanges.

A Working group on crypto regulation is scheduled to hold its first meeting in the Duma this month, starting with a review of a CBR report, the chairman of the parliamentary financial markets committee, Anatoly Aksakov, announced in November. Commenting on the contents of the upcoming report, Chistyukhin said:

I'll give you a hint – we don't see a place for cryptocurrencies in the Russian financial market.

His statement comes according to sources cited by Reuters specified that the regulator is considering a ban on Russian crypto purchases. Then, during a press conference on Friday, CBR Chairwoman Elvira Nabiullina reiterated the bank's skepticism towards cryptocurrencies and insisted that Russia's financial system should not be used to facilitate crypto transactions.

Russia's central bank ready with digital ruble prototype

While the CBR clarified its stance on cryptocurrencies, it worked on developing a Russian Central Bank digital currency ( CBDC ). The prototype of the digital ruble platform is now ready, First Deputy Chairwoman Olga Skorobogatova told reporters this week. Quoted by the Interfax news agency, she added that the authority plans to start pilot operations with the currency after the January holidays.

A dozen Russian banks will take part in the first of several phases of trials that will last throughout 2022. In early December, the Bank of Russia said that it would invite credit organizations and conduct consumer-to-consumer transactions in the first phase. In the second phase, in which transactions between private individuals and companies will be tested, the Federal Treasury will join together with financial intermediaries.

CBR began thinking about a digital version of the Russian ruble three years ago and last year decided to explore the possibility of issuing the CBDC. A consultation paper was published in October 2020 and the regulator collected feedback from financial sector players. In April 2021, the bank released a digital ruble concept outlining its main architecture. In addition to Russian citizens, the bank also plans make possible Non-residents to open digital ruble wallets, use the currency and convert it into foreign fiat.

Do you think the Bank of Russia will ban crypto-related transactions through the Russian financial system? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy journalist from Eastern Europe who likes Hitchens' quote: "Being a writer is what I am, not what I do." In addition to crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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