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Russian Central Bank's Report Evaluates Digital Assets Role in the Financial System

  • The Central Bank of Russia has released a report on digital assets.

  • The report explores how technology could be integrated into the country's traditional banking system.

08-Nov-2022 By: Simran Mishra
Russian Central Bank

In the midst of a storm of global financial sanctions, 

The Central Bank of Russia (CBR) is exploring ways to incorporate crypto assets and blockchain technology into its domestic financial system.

On November 7, the CBR issued a public consultation report titled "Digital Assets in Russian Federation" via Telegram.

It explores how the sanctioned nation may open up its domestic market to overseas digital asset issuers, particularly those from "friendly countries."

The report also focuses on digital asset legislation, retail investor safeguards, digital property rights connected to smart contracts and tokenization, and ideas for reformed accounting and taxation.

The CBR stated that it firmly encourages the "further development of digital technologies" as long as they do not pose "uncontrollable" financial or cybersecurity risks to consumers.

Despite the fact that blockchain technology is still in its infancy, the CBR stated that the same regulatory norms that govern the issuance and circulation of traditional financial instruments should also apply to digital assets.

According to the CBR, short-term regulation should focus on preserving investor rights, strengthening criteria for admitting a digital asset into circulation, ensuring the issuer is accredited, and disclosing all necessary information to investors.

The Central Bank's message on Telegram, which was initially written in Russian, said while the legal foundation for digital assets has been established, improved regulation is essential for their future development.

Concerning smart contract regulation, the central bank noted that a legislative framework was already in place. However, it recommends that Russian-created smart contracts be independently audited before deployment.

CBR was also bullish on the prospect of tokenized off-chain assets. The bank did, however, state that legislation would be required to ensure a "legal connection" exists between the token holder and the token itself.

On September 22, the Russian Ministry of Finance allowed the use of cryptocurrencies as a cross-border payment mechanism by Russian residents.

The CBR's 33-page report, however, made no mention of the increased sanctions placed on Russia and the crippling effect they have had on its economy, nor did it touch the Russia-Ukraine War that is currently going place in Ukraine.

It does, however, mention a different report in the works that focuses on Russia's new central bank digital currency (CBDC) — the digital ruble — which is set to be deployed in early 2023.

In August 2022, the CBR indicated that they intend to roll out the digital ruble to all Russian-based banks in 2024.

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