Central Bank of Russia report examines the place of crypto in the financial system

Russia's central bank has released a report on digital assets that examines how technology could be integrated into its mainstream financial system. New

The Central Bank of Russia (CBR) is exploring ways to integrate crypto assets and blockchain technology into its local financial system amid a buildup of global financial sanctions.

In a Telegram message from the CBR on November 7, the central bank shared a public consultation report titled "Digital Assets in the Russian Federation".

It examines how the sanctioned state could possibly open its domestic market to foreign issuers of digital assets, especially those from "friendly countries".

Other areas of focus in the report are digital asset regulation, retail investor protection, digital property rights related to smart contracts and tokenization, and accounting and tax reform proposals.

The CBR said it strongly supports the “further development of digital technologies” provided they do not create “uncontrollable” financial or cybersecurity risks for consumers.

Despite the start of blockchain technology, the CBR said the same regulatory rules regarding the issuance and circulation of traditional financial instruments should also extend to digital assets.

The CBR said that near-term regulation should focus on protecting investors' rights, strengthening rules for admitting a digital asset into circulation, ensuring that the issuer is accredited, and ensuring that the issuer discloses all relevant information to investors.

The central bank's message on Telegram, originally written in Russian, stated that although the legal framework for digital assets has been created, better regulation is needed for its continued development:

"Russia has created the necessary legal framework for the issuance and circulation of digital assets [...] But so far the market is at the initial stage of its development [...] and is several times lower than the market for traditional financial instruments. Its further development requires better regulation."

With regard to the regulation of smart contracts, the central bank acknowledged that a legislative framework was already in place. However, it offers...