Bank of Russia Shares Details on Evolution of Digital Asset Market in Consultation Paper

The Bank of Russia proposes to discuss possible circulation of digital assets “at exchange trading, harmonization of approaches to their taxation with traditional financial instruments, conditions for acquiring digital assets by individual institutional investors, establishment of the accounting procedure for such investments, as well as opening the domestic market for foreign issuers from friendly countries.”

These and other initiatives are “included in the regulator’s consultation paper.”

The issuance and circulation of digital assets is “a new phenomenon in the financial market,” according to the Bank of Russia.

Their advantage “lies in the fact that they can be based on distributed ledger technology, thus automating transactions through smart contracts.”

Optimization of data storage and transmission “adds to the efficiency of business processes and reduces costs.”

An appropriate legal framework has been “created in Russia for the issuance and circulation of digital assets in information systems.” However, the market is “currently at the early stage of its development and, in terms of volume, is many times behind the market of traditional financial instruments.”

Further development of the digital rights market and the appearance of new products and services there “require enhanced regulation.”

The initiatives of the Bank of Russia will “contribute to the advancement of the infrastructure of digital assets and increase their attractiveness for issuers and investors while protecting their rights and interests.”

The Bank of Russia “accepts comments and suggestions on the consultation paper until 7 December 2022.”

For more details on this update, check here.

As reported in September 2022, the Bank of Russia and market participants “launched the testing of the digital ruble platform and successfully completed the first digital ruble transfers between individuals.”

The creation of a prototype of the digital ruble platform was “finished in December 2021.”

Twelve banks announced their readiness “to take part in testing the platform.”

Three banks from the pilot group have already “connected to the platform.” Two of them have successfully “completed a full cycle of digital ruble transfers between clients using banking mobile applications.”

In addition to opening digital wallets on the digital ruble platform, clients were also able “to exchange non-cash rubles in their accounts for digital ones, and then they transferred digital rubles between themselves.”

Other members of the pilot group are going “to join the testing of the digital ruble platform as soon as their IT systems are finalized.”

The Bank of Russia’s and market participants’ interaction in operations “with digital ruble is based on a two-tier retail model approach.”

The Bank of Russia is “the issuer of a digital ruble and the operator of the platform.” Within this framework, clients “open wallets and conduct operations via them on the digital ruble platform through financial institutions.”

Thanks to the unique character of a digital ruble clients “will be able to access their digital wallets via mobile applications of their respective banks.”

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