The Central Bank of Russia has recently proposed authorizing traditional stock exchanges to operate in the digital assets market. Industry watchers say the regulator aims to provide investors with an option to trade cryptocurrencies in a controlled environment.
Stock exchanges and central clearing counterparties may be allowed to facilitate the trading of digital financial assets (DFAs), a collective term encompassing cryptocurrencies and tokens under current Russian law. The proposal was put forward by the Central Bank of Russia (CBR) at a meeting with exchanges, brokers, and information system operators, a group of entities to which crypto platforms pertain.
Representatives of the Moscow Exchange, SPB Exchange, major brokers, and information system operators that have the right to issue digital financial assets met with Bank of Russia officials behind closed doors on Tuesday, the Kommersant reported. The discussions were focused on the new plan to organize the trading of DFAs and utilitarian digital rights (UDRs) drafted by the CBR.
Some crypto-related activities in Russia were regulated with the law “On Digital Financial Assets,” which went into force in January 2021, including issuance of digital coins (digital financial assets) and fundraising through tokens (digital rights). However, other operations such as mining and trading, as well as the circulation of cryptocurrencies, remained unregulated. A new law “On Digital Currency,” authored by the finance ministry, aims to change that.
A source from Russia’s financial sector, who took part in the meeting, told the business daily that the exchanges and the brokers supported the idea to trade digital assets, which would expand the array of financial instruments available to them. At the same time, the information system operators were skeptical about the proposal.
They fear that admitting stock exchanges into this market will jeopardize the business of digital asset platforms which have not had enough time to develop yet. Their representatives also warn about various challenges, including those related to the implementation of blockchain technologies and the slower pace of operation of traditional exchange platforms.
On the other hand, officials from the Moscow Exchange welcomed the initiative, stating they were ready to discuss it further. “The concept involves the use of existing exchange and settlement infrastructures. This will contribute to the concentration of liquidity, which has been confirmed by the global practice of secondary circulation of both fiat and digital assets,” they noted during the talks.
According to Pavel Utkin, a lead lawyer at Parthenon United Legal Center, Bank of Russia seeks to gain control over the circulation of DFAs and turn their trading into something similar to the regular stock market. “Since the regulator has lost the battle with the Ministry of Finance to block the circulation of cryptocurrencies in the country, it is necessary to create a platform that will make it possible to control the circulation of these assets,” the expert elaborated.
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