Kremlin agrees with CBR that Far East cryptocurrency project is premature - source
MOSCOW. Oct 23 (Interfax) - The Central Bank of Russia (CBR), which sees private cryptocurrencies as a source of heightened risk, has secured the support of the government in the dispute over the future of the Voskhod platform, an investment system set up by NP RTS and the Far East Development Fund in June 2016.
NP RTS management has said that the platform could be used for transactions with digital assets, including cryptocurrencies. A deal was announced for an offering of the company LavkaLavka, and an agreement was signed on future possible offerings by Skolkovo residents.
However, at the beginning of October the CBR recommended that MFB Clearing Center exclude provisions from its clearing rules that allow clearing of obligations arising from over-the-counter electronic contracts. This is the clearing center that provides clearing services for Voskhod.
A source at a finance and economics agency told Interfax that Central Bank chief Elvira Nabiullina sent President Vladimir Putin a letter at the beginning of October in which she warned about the risks of this project in Russia's Far East.
"At present in the Far East, Vnesheconombank (VEB) together with JSC Far East and Baikal Region Development and Noncommercial Partnership for Development of the Financial Market RTS have initiated a project to create a proving ground for testing technology and approaches to regulation of cryptocurrencies and other electronic assets, including by organizing turnover of such assets. However, an assessment of the risks and consequences of launching this project, as well as its influence on the financial sector of the region and the country as a whole, was not conducted. We believe the implementation of such a project is premature and entails risks," the source quoted the letter as saying.
Nabiullina recalled that China closed cryptocurrency exchanges in September 2017 and participants of this market interested in initial coin offerings (ICO) and trading cryptocurrencies could increase trading of such digital assets in Russia. This situation could lead to "substantial risks for the country's financial system," she warned in the letter.
For the "purpose of stable development of the financial market," Nabiullina asked Putin to instruct the CBR and the government to carefully work out proposals related to the launch of projects involving the use of cryptocurrencies and ICO. A decision on the advisability of the Far East project can only be made based on the results of such analysis, she said.
The president's positive resolution on Nabuillina's letter became a presidential order dated October 4. Executing it, on October 9 First Deputy Prime Minister Igor Shuvalov instructed the Finance Ministry and Economic Development Ministry, together with the CBR, to assess the risks of projects that involve the use of cryptocurrencies and digital assets.
On October 10, Putin held a meeting on cryptocurrencies with representatives of the CBR, Finance Ministry, Economic Development Ministry and other ministries and agencies.
Finance Minister Anton Siluanov subsequently said that a decision was made at the meeting that the government would "lead and regulate" the process of issuing and circulating cryptocurrencies in Russia. The Finance Ministry and CBR will draft a framework bill on regulation of the cryptocurrency market by the end of this year, he said. Regulation of cryptocurrencies will be handled by the CBR, Finance Ministry and Federal Financial Monitoring Service within the scope of their authority.
Communications Minister Nikolai Nikiforov said last week that his ministry has drafted a government resolution on the technological implementation of an issue of a national cryptocurrency. Decisions on issuing and regulating it will be made by the CBR and Finance Ministry.