Russian central bank warns domestic stock exchanges against crypto-related funds

The Central Bank of Russia (CBR) advised domestic stock exchanges not to admit the shares of companies related to cryptocurrencies due to the high volatility, low transparency, and other risks crypto poses.

The regulator emphasized that digital assets carry increased risks for people who do not have sufficient experience and knowledge in the sphere.

“Cryptocurrencies and digital assets are characterized by high volatility, low transparency of pricing mechanisms, low liquidity, technological, regulatory and other specific risks. Purchase of investment products tied to them exposes people who lack experience and professional knowledge to a high risk of losing money,” the CBR stated in a notice published on Thursday.

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It advised stock exchange operators against listing any securities, such as exchange-traded funds, that provide payments based on the prices of cryptocurrencies, digital assets issued abroad, cryptocurrency price indexes, crypto derivatives, and securities issued by cryptocurrency-related funds. Asset managers have been urged to exclude such assets from mutual fund portfolios, while brokers and trustees were not to offer them to nonqualified investors.

“The recommendations are a preventive measure â€" they are aimed at preventing the offer of such instruments to a mass investor,” the regulator said.

Restrictions do not apply to national digital currencies, if issued, or digital assets issued in accordance with the Russian legislation covering the crypto and registered with the CBR.

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Russia passed a law regulating digital assets in June 2020, with the CBR announcing plans to study the risks of investing in cryptocurrencies. On June 21, the CBR governor Elvira Nabiullina recommended against investing in cryptocurrencies, dubbing crypto assets the most dangerous economic strategy.

Earlier, regulations were also added banning Russian public officials from owning crypto assets and obliging election candidates to report their crypto holdings.

Nonetheless, cryptocurrencies, especially bitcoin, have been used for fundraising by Russia’s civil and political activists and independent journalists, CoinDesk reports.

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