Russia scraps proposal for government-backed crypto exchange
Russia has decided to abandon its previous plans of creating a national cryptocurrency exchange and will instead focus on developing regulations that would enable private companies to establish such exchanges.
Anatoly Aksakov, the head of the State Duma committee on the financial market, revealed the recent developments to local media outlet Izvestiya on May 29. He said the idea behind allowing private platforms, rather than establishing an official venue, is to ensure compliance with local regulations, as national exchanges could potentially be exploited to evade sanctions.
According to the report, the Russian Central Bank will oversee the regulation of these exchanges and intends to introduce new operational guidelines before the end of the year. This shift in approach reflects Russia’s focus on creating a regulatory framework that allows private entities to engage in cryptocurrency exchange activities within established legal boundaries.
Due to the economic consequences resulting from the sanctions, Russia has started to work on a new monetary and financial system for the country. Members of the lower chamber of the Russian parliament have been actively working on drafting amendments to the country’s cryptocurrency legislation.
Also in March, Russia postponed its central bank digital currency (CBDC) pilot indefinitely, which was originally scheduled for April 1, as it awaits specific legislation to be voted before the “crypto ruble” trial.
The Bank of Russia announced in February plans to roll out the first real-world pilot for the digital ruble in April 2023 instead of 2024, as the nation fast-tracks plans to circumvent Western sanctions. Thirteen banks and select merchants have been qualified to participate in the trials of the central bank digital currency (CBDC).
Like other regulators, the Bank of Russia will restrict the amount of CBDC available to limit the flight of commercial bank deposits to the digital version. Instead, it intends to roll out the digital ruble gradually and believes that the underlying demand will depend on ease of use, transaction costs, and the ability to convert the funds.
To avoid a significant reduction in banking system’s liquidity, the central bank said the interest on deposit will remain attractive to consumers compared to the non-interest-bearing digital ruble. Following the first pilot stage, Bank of Russia would indicate the number of general customers that would be able to participate and also stands ready to introduce limits on the amounts of digital rubles that a wallet can hold.
The deputy governor floated the idea of cross-border integration with the digital yuan and the central bank digital currencies (CBDCs) of other friendly countries.