New Report: Russian Central Bank Looks to Integrate ‘Digital Assets’ Into its Financial System
The Central Bank of Russia (CBR) has released a report that focuses on digital assets and how the new technology could be integrated into its traditional financial system.
On Monday, Russia’s central bank shared a 32-pages-long public consultation report titled 'Digital Assets in Russian Federation', drawing comparisons between this new technology and the traditional system, and seeking opinions on how the former could be included in the latter.
The paper opens with a discussion on the distributed ledger technology (DLT) and the emergence of “new tools and services”, including smart contracts, “digital (tokenized) assets”, central bank digital currencies (CBDCs), cryptocurrencies, and decentralized finance (DeFi) applications (dapps).
Notably, all these are separate categories, and most are not discussed in this specific report. It mainly focuses on digital assets, a term it uses to refer to tokenized financial instruments, collateralized stablecoins, and non-fungible tokens (NFTs). “The concept of digital finance,” it said, does not include cryptocurrencies and “unsecured (including algorithmic) stablecoins.”
While these new tools come with a significant set of benefits, said the report,
“The digital asset market is still in its initial stage of development and is many times inferior to the market of traditional financial instruments in terms of volume.”
The main goals when it comes to digital assets, the bank said, are regulation, financial stability, consumer protections, and compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements.
Based on the results of discussions with market participants, it added, the Bank of Russia “formulated and prioritized areas for further improvement" in regard to "digital rights". These include:
- taxation of digital rights;
- circulation of digital rights within the traditional market infrastructure;
- issues of regulatory arbitrage between digital rights and traditional financial instruments;
- changes in AML/CFT regulation;
- issues of circulation of digital rights issued in accordance with foreign legislation;
- regulation of the use of smart contracts.
Furthermore, among the 20 questions listed for consultation, the bank asked who should determine the appropriate standard terms of a smart contract, offering the following options: market participants; the operator of the information system in which digital assets are issued; the Bank of Russia; or somebody else.
It also asked the participants if they think it is necessary to introduce mandatory disclosure requirements for digital rights issuers, and which entities should be subject to mandatory disclosure rules.
Meanwhile, as reported, at the very end of October, Anatoly Aksakov, the Chairman of the State Duma’s committee on the financial markets, said that a crypto mining regulation bill had been submitted to parliament – and that the bill would also allow Russians to use crypto “as a means of payment” outside the country. Moscow has previously banned the use of crypto pay domestically.
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