Russian Safeguards for Crypto Companies
Since the beginning of the war between Russia and Ukraine, the West has been active in placing several sanctions on Russia.
On one hand, sanctions have limited Russia’s representation at a global level while on the other seriously affected its economy. The aim of sanctions is to weaken Russia’s financial strength and force it to stop the war.
However, Russia seems to be not convinced and has taken the route of facing financial difficulties instead.
For safeguarding the public and private sectors and industries, including the crypto industry, the Russian Government and national institutions are laying down measures.
In this connection, the Central Bank of Russia i.e. CBR has been implementing reduced regulatory oversight policies.
Reduced Regulatory Oversight Implemented For Countering West Sanctions
As an interim arrangement, CBR has directed local entities, involved in issuing digital financial assets (DFAs), to keep confidential sensitive information.
Consequently, DFAs are officially authorized not to disclose such confidential information as a counter strategy for avoiding risks emanating from West’s sanctions.
It may, however, be noted that this policy i.e. the exemption approved by CBR for DFAs is valid till 1st July 2023. After the expiry of the period, it would then be decided CBR whether decides to renew the policy or not.
This exemption was duly noted and acknowledged even by the local crypto media outlets in Russia. Crypto media highlighted CBR’s announcement and commented that the step has been taken for providing a relief package to DFAs.
Crypto media outlet further said that the relief package would benefit local crypto stakeholders in smooth functioning and boosting their businesses.
It may further be noted that Russia is on the road to laying down proper regulation for regulating digital currencies, which also include Bitcoin.
However, the Russian state has already adopted a law called “Digital Financial Assets”. Under this law, Russian crypto entities are authorized to issue digital currencies and tokenized crypto in a limited/ restricted environment.
There are currently three major operators within the DFAs which are running, operating, and managing information systems. All three have been duly provided with the required licenses by the Russian central bank.
These licensed DFAs include amongst others, a top financial institution called ‘Sber’, Lighthouse, and Atomyze i.e which is a tokenized service provider.
CBR’s press release explains that the purpose of the relief package is to ensure the reduction and mitigation of burden from such DFAs.
The release acknowledged that due to sanctions, such organizations have been facing a huge economic crisis which is stemming from the burden.
West Sanctions and Implications
When Russia decided to invade the neighboring state, Ukraine, it wasn’t unaware that the West would respond so aggressively. Since the invasion, Russia’s financial strength has been subjected to various sanctions.
Consequently, Russia has been made to suffer several penalties which have adversely affected its ability to remain financially strong.
Furthermore, the invading state’s access to international markets and finances also has been restricted.
This is the reason why the Russian Government has been implementing policies to minimize the impacts of West sanctions. The aim is to take the pressure off and support local institutions in bolstering the country’s financial strength.
Otherwise, in ordinary conditions, Russia’s take on crypto is rather harsh and quite discouraging when it comes to regulating the crypto industry.
Russia has remained very strict against cryptocurrencies and with their streamlining process. However, as the country needs to circumvent the sanctions imposed by the EU, it is adopting crypto.
The country is now changing its stance towards the cryptocurrency industry. It is trying to come up with a way to deal with the situation that involves strict sanctions from the EU.
If things do work out in favor of Russia, then it may go back on the support it has been providing to the crypto industry at the moment.
