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Russia’s Central Bank Issues Warning on ICOs, Cryptocurrencies

Last Updated March 4, 2021 4:59 PM
Samburaj Das
Last Updated March 4, 2021 4:59 PM

The Bank of Russia has issued a public statement on the risks it sees inherent in initial coin offerings (ICOs) and cryptocurrencies.

The Bank of Russia, the country’s central bank, published a public notice  on its stance toward cryptocurrencies and digital token sales, citing a number of queries from investors and media about the rise in popularity and adoption of digital currencies. The central bank confirmed that it “monitors” the cryptocurrency market and is continuing to develop a regulatory framework for cryptocurrencies.

As such, Russia’s central bank is against allowing cryptocurrencies or any related financial instruments within the Russian Federation. The authority also reiterated an earlier statement  from January 2014 which explicitly compared bitcoin to a “money surrogate”, rendering it illegal in the Russian state.

The notice also highlighted the “high risks” involved in cryptocurrency trading due to sharp ‘fluctuations’, as well as fundraising through ICOs.

“Cryptocurrencies are issued by an unlimited circle of anonymous entities,” read a roughly translated excerpt from the central bank notice. “Due to the anonymous nature of the issuance of cryptocurrency, citizens and legal entities can be involved in illegal activities including legalization (laundering) of proceeds from crime and financing of terrorism.”

Notably, the statement further added:

Given the high risk of circulation and use of cryptocurrency, the Bank of Russia considers it premature to admit cryptocurrencies, as well as any financial instruments nominated or associated with crypto-currencies, to circulation and use at organized trades and in clearing and settlement infrastructure on the territory of the Russian Federation for servicing transactions with crypto-currencies and derivative financial instruments on them.

Citing the above, the central bank advised citizens to be aware of “increased risks” when adopting or investing in cryptocurrencies.

The warning comes soon after its Chinese counterpart’s move to impose a sweeping ban on ICOs on Monday. Regulators from a number of other countries including Singapore, Hong Kong and the United States have also issued warnings of their own on ICOs.