July 25, 2021

The Central Bank indicated not to admit shares of companies related to cryptocurrency on exchanges

The Bank of Russia stressed that digital assets carry increased risks for people who do not have sufficient experience and knowledge.

Russian exchanges should not be allowed to tradesecurities of Russian and foreign issuers, payments for which depend on cryptocurrency rates, prices for foreign digital financial assets, changes in cryptocurrency and cryptoasset indices, as well as the cost of crypto derivatives and securities of cryptocurrency funds. A letter with a corresponding recommendation was issued by the Bank of Russia.

In addition, the financial regulator recommendedmanagement companies should not include these assets in mutual funds, and brokers and trustees should refrain from offering pseudo-derivative financial instruments with such underlying assets to unqualified investors.

The Central Bank stressed that cryptocurrencies and digitalassets are characterized by high volatility and non-transparency of pricing, low liquidity, as well as technological, regulatory and other specific risks. The purchase of financial instruments tied to them creates increased risks for people who do not have sufficient experience and knowledge, noted the Bank of Russia.

“The recommendations of the Bank of Russia are a preventive measure - they are aimed at preventing the offer of such instruments to a mass investor,” the regulator said in a statement.

Restrictions do not apply to national digitalcurrencies (CBDC), if issued. Also, the new rules do not apply to CFA issued in accordance with Russian legislation in information systems, the operators of which are included in the register of the Bank of Russia.

At the end of June, the Central Bank announced plans to study the risksinvesting in cryptocurrency. The regulator planned to consider the systemic risks that Russian individuals and legal entities may be exposed to when investing in digital assets. The study involved 15 largest Russian banks, as well as electronic payment systems.