Russia to Test Regulated Crypto Trading in a Three-Year Trial Program

Highlights:

• Russia will allow some investors to trade crypto in a three-year trial with strict rules.
• The central bank bans crypto payments and limits trading to approved financial products.
• The trial may change future crypto rules and affect investment options.

The Bank of Russia has proposed a three-year trial program allowing a limited group of investors to trade cryptocurrencies. The central bank forwarded the proposal to the government after receiving instructions from the Russian president. The proposed program would allow “particularly qualified” investors to conduct digital currency transactions but under strict oversight.

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Financial experts who want to participate must demonstrate either securities and deposit assets surpassing 100 million rubles or annual income levels above 50 million rubles. Financial institutions and corporate-qualified investors who satisfy the legal standards can also participate.

The experimental legal regime (EPR) will provide clear rules for financial institutions and their investments. The central bank will impose specific risk-based requirements for financial institutions that want to invest in cryptocurrency.

New Rules and Investor Restrictions

The Bank of Russia has stood firm in its current position that cryptocurrencies cannot serve as payment methods. The proposed framework strengthens its position as it bars payments using cryptocurrency and blocks trading outside the experimental control. The central bank has established penalties that will be levied on individuals and companies who break the set restrictions.

The trial program enables approved investors to engage in financial instruments that reference crypto values. Qualified investors can trade derivative financial instruments, digital financial assets, and securities without owning cryptocurrencies.

According to the Bank of Russia, private cryptocurrencies are volatile and operate based on mathematical algorithms. The central bank will oversee the experiment and introduce measures that will protect investors from major financial losses.

The proposal also includes requirements that financial institutions looking to participate must meet. Crypto investment providers must show their ability to handle investment risks. In addition, they need to fulfill the rules set by regulators. The bank will develop criteria that will be used to vet qualified market participants who will enter the experimental framework.

The country has taken a different stance on virtual assets despite the ongoing adoption in other countries. Russia recently banned crypto mining in 10 regions until 2031, starting in January. Moreover, the Russian government also passed a new law to regulate digital currency turnover. The law aims to control Bitcoin and cryptocurrency mining activities. This is in contrast to the United States, where the president has vowed to make the country the crypto capital of the world.

How the Trial Could Change Future Policies

The proposed framework shows the current approach Russia has taken toward virtual assets. Russia has continued to restrict cryptocurrency payments in the country. However, the recent program will investigate their use while making investments and cross-border payments. 

The program will also add support to previous efforts the country has taken in integrating cryptocurrency for international payment settlements. Three years ago, the Russian government initiated discussions that centered on the use of digital assets in international business transactions. Finance Minister Anton Siluanov recently emphasized that Russia had conducted tests with virtual assets for its international trade requirements.