Bank of Russia disapproves of cryptocurrencies, apart from Russia’s national one

Maria Nikolova

Bank of Russia’s Governor Elvira Nabiullina says the regulator remains counter any legalization of cryptocurrencies as a legal means of payment, but is, nevertheless, exploring the opportunity to create a national cryptocurrency based on blockchain.

The Bank of Russia has lately been very active in voicing its negative stance with regard to Bitcoin and its likes. The latest comments by Bank of Russia’s Governor Elvira Nabiullina are no exception to this trend.

Ms Nabiullina, quoted by Russian information agency TASS, has noted that Russian central bank sees no point in allowing cryptocurrency trading on Russian exchanges. “We are not supporting legalization of cryptocurrencies as means of payments”, she said.

However, Ms Nabiullina added that the regulator sees the perspectives for blockchain and confirmed that the Central Bank is exploring the opportunity of creating a national cryptocurrency based on blockchain.

Her comments were echoed by those made by Bank of Russia’s Deputy Governor Olga Skorobogatova, who said a national crypto currency would help spur non-cash settlements and electronic payments. Among the problems to be considered is whether and how such a cryptocurrency would be different from electronic money and whether it would replace them. Moreover, the risk of using crypto currencies for money laundering has to be tackled.

The Bank of Russia has previously warned that crypto currencies are money surrogates and their use may be treated as violation of the AML and CFT laws. This stance was first made public early in 2014 and was reiterated in September 2017.

Earlier in October, the Russian financial “Megaregulator” has criticized the cryptocurrency-related activities of the MFB Clearing Center, which had presented a new set of clearing rules on its website, including ones covering clearing of off-exchange electronic contracts for cryptocurrencies. The Bank of Russia demands that MFB removes the rules associated with these contracts and presents the redacted version to the regulator. The recommendations have been sent via mail to the company.

Such contracts, according to the Central Bank, bear high risks. The lack of an adequate risk management system results in a threat to the interests of investors. The Central Bank stresses that cryptocurrencies are not regulated in Russia at present and that the operations involving cryptocurrencies have some of the features of illegal activities such as money laundering and terrorism financing.

The Bank of Russia also emphasized that the internal documentation of the clearing organization does not outline any measures for reducing the technological and other risks, related to virtual currencies.

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