Russia’s Central Bank orders local stock exchanges to avoid listing cryptocurrency-related funds
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The Bank of Russia published a notice and explanatory letter on Thursday, July 22, instructing the country’s stock exchanges not to list investment products related to cryptocurrency prices.
According to the recommendation letter, the central bank instructed the stock exchange operators not to list securities such as exchange-traded funds, which offer payments based on the prices of crypto assets, securities issued by cryptocurrency-related funds. , digital assets issued abroad and crypto price indices.
The regulator also doesn’t want any listing of crypto derivatives and crypto fund securities. Additionally, the central bank directed mutual fund managers not to list companies offering crypto services in their managed portfolios and advised trustees and brokers to avoid providing such securities to unqualified investors.
The regulator approved the recommendation to prevent retail investors from having access to products they do not understand. The Bank of Russia stated in its statement:
“Cryptocurrencies and digital assets are characterized by high volatility, low transparency of price mechanisms, low liquidity, technological, regulatory and other specific risks. Buying investment products tied to them exposes people who lack professional experience and knowledge to a high risk of losing money. “
The recommendations only apply to accredited retail investors, and professional investors can still invest in stocks of crypto-related companies.
However, the regulator claimed that the ban does not apply to central bank digital currencies (CBDC) or issued digital assets, according to the Russian law on information systems whose operators are registered with the Bank of Russia.
Tough stance on cryptocurrencies
Regulatory recommendation comes when many crypto companies move to major stock exchanges in Asia, Europe, and the US for a public listing of their shares.
However, the Bank of Russia has been reluctant to allow crypto companies to enter the mainstream financial sector.
Crypto assets were illegal in Russia until last year, when the central bank granted such digital assets legal status, but prohibited their use in payments. The regulator maintains that the Russian ruble is the only legal tender that citizens can use for financial transactions and payments.
The central bank views digital currencies as the future of the financial system, saying there is a need for cheap and fast payment systems, and the central bank’s digital currencies can fill the gap.
The regulator maintains that CBDCs are not the same as crypto assets like Bitcoin. According to the regulator, CBDCs are issued and controlled by the authorities, and their values are pegged to a traditional currency such as the US dollar.
In September 2020, the Bank of Russia introduced more regulations to prohibit Russian public officials from owning cryptocurrencies and forcing election candidates to report their cryptocurrency holdings.
In October 2020, the central bank presented a proposal to limit the amount of digital assets that non-professional investors can buy in a year.
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