Russian authorities cancel national crypto exchange plans, prioritise local regulation, marking a pivotal shift in Russia’s crypto landscape.
In a shocking moment, Russian authorities have announced a significant shift in their approach to cryptocurrency. The ambitious plan to establish a national cryptocurrency exchange has been put on hold, with the government now turning its attention towards drafting regulations for local exchanges.
Diversity Over Monopoly: The Power of Many Over One
In a strategic shift, Russian authorities have decided to forgo the establishment of a national crypto exchange, according to Anatoly Aksakov, head of the State Duma committee on the financial market. Instead, the focus will be on setting up regulations for the formation and operation of such entities.
Aksakov explained to Izvestia that these exchanges, which aid businesses in conducting cross-border transactions, may face potential restrictions. However, this move is also expected to spur the emergence of new organizations.
Anatoly has indicated a shift in strategy. Rather than establishing a single national crypto exchange, the focus will now be on formulating regulations for the creation and operation of such platforms. Aksakov elaborated that these exchanges will facilitate cross-border transactions, potentially circumventing sanctions restrictions. This could lead to the imposition of new constraints.
However, the emergence of other organizations is anticipated, with the primary requirement being compliance with established rules.
The Central Bank is likely to oversee the operations of crypto exchanges, with the regulations being incorporated into the draft law on experimental legal regimes, as noted by the deputy.
Ivan Chebeskov, director of the financial policy department of the Ministry of Finance of the Russian Federation, informed Izvestia that the Ministry did not endorse the idea of a single national crypto exchange. Instead, they proposed to legally regulate the potential for businesses to establish such platforms. The department maintains that digital currencies should be regulated comprehensively.
A consensus has been reached with the Central Bank to legally recognize mining and allow international transactions and cryptocurrency exchanges within the experimental legal framework.
Russian Crypto Community Supports The Latest Move
The decision to forego the creation of a national crypto exchange and instead establish rules for the formation and operation of such entities has been met with approval from market participants. Oleg Ogiyenko, Director for Government Relations at BitRiver, highlighted that this approach would help mitigate risks associated with sanctions, cyber-attacks on infrastructure, and potential market dominance abuses.
Ivan Gostev believes that such a system would foster the growth of more competitive and innovative companies. He pointed out that several countries have already implemented legislation regulating crypto exchanges while still allowing room for industry development.
Gostev emphasized that these platforms could be licensed, with their financial reporting activities and anti-money laundering measures subject to oversight. He also stressed the need for crypto exchanges to ensure data and communication protection. Furthermore, he suggested the implementation of trading volume limits to prevent price manipulation.
Oleg Ogienko suggests that the initial stages should limit the involvement of unqualified investors on these platforms. Special requirements, including data security and confidentiality for Russian clients, should be imposed on foreign crypto exchanges operating in Russia.
Alexey Tarapovsky, the founder of Anderida Financial Group, believes these platforms will aid national companies in conducting international crypto transactions amidst sanctions. He acknowledges the risk of potential new restrictions but notes the interest of Western players in cross-border transactions. With digital currencies already processing payments worth about $10 billion annually, he anticipates the emergence of legal exchanges as early as 2024 under favorable conditions.
Throughout 2022, Russian legislators were actively engaged in drafting amendments aimed at establishing a national crypto exchange. This initiative reportedly received backing from both the Ministry of Finance and the Central Bank of Russia, despite their historical differences over cryptocurrency regulation in the country.
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