Russia’s Central Bank Issues Cryptocurrency Risks Warning

News and Analysis

The Bank of Russia believes admitting cryptocurrencies or any other financial instruments associated with digital currencies to trading and turnover in Russia’s clearing infrastructure is premature.

The statement by the regulator’s press office confirms its position dating back to 2014 concerning virtual currencies.

Last week, Russia’s Deputy Finance Minister Alexei Moiseev suggested that rather than a currency, bitcoin should be regulated as an asset and should be restricted to “qualified investors.”

Most cryptocurrency operations are beyond the legal terrain of Russia and most other countries, the Bank reminded.

“Cryptocurrencies are not backed and not guaranteed by the Bank of Russia,” the release reads.

The regulator believes that the anonymous nature of cryptocurrencies might involve “individuals and legal entities into illegal activities, which includes money laundering and financing of terrorism.”

Aside from that, exchange rate fluctuations and technological risks may result in financial losses, the regulator stated.

“Considering the high risks inherent in turnover and utilization of cryptocurrencies, the Bank of Russia believes admitting cryptocurrencies and any financial instruments denominated in or associated with cryptocurrencies to turnover and usage at organized trading platforms, as well as in Russia’s clearing infrastructure, is premature,” the statement reads.

The Bank of Russia also noted that it is cooperating with relevant federal authorities to develop the approach towards regulation of cryptocurrencies in Russia.

“There are technological risks inherent in issuance and turnover of cryptocurrencies, as well as risks related to assignment of rights to virtual currencies. This might result in financial losses incurred by individuals, and impossibility to protect consumers rights to obtain financial services in case they’re violated,” the regulator stated.

Remarkably, Yuri Trutnev, the Presidential Plenipotentiary Envoy to the Far East Federal District, has recently stated that the Central Bank has allowed cryptocurrencies to Voskhod, the online system created to attract private investment in the region’s projects.

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