Legal Framework for Tokenization Submitted to Russia’s Crypto Bill

Published at: Feb. 17, 2020

A successful tokenization trial could lead to big changes in Russia’s proposed cryptocurrency legislation.

The Central Bank of Russia (CBR) announced on Feb. 17 the completion of a blockchain tokenization pilot using a platform developed by Nornickel within its regulatory sandbox. 

The bank subsequently proposed to amend Russia’s digital assets law to accommodate tokenization platforms.

The platform is open to all organizations and it allows them to issue hybrid tokens backed by a basket of assets. The technology is said to expand financing possibilities for businesses, while giving new investment options for its users.

The head of CBR’s fintech division Ivan Zimin noted that it was one of the biggest projects backed by the sandbox. He was especially excited about the possibility of issuing hybrid tokens, believing that they can “quickly adapt to demands from businesses and users.”

Zimin also revealed that the bank proposed a regulatory amendment driven by the results of the pilot:

“Following the results of the pilot program, the Central Bank of Russia proposed amendments for the federal bill project ‘On digital financial assets’ that are required to integrate and develop these solutions on the growing digital asset market.”

The platform was developed by Nornickel, one of the largest mining companies in the world. The corporation previously developed the platform to tokenize palladium, and began testing a digital asset trading platform in December 2019.

Crypto’s unclear regulatory status in Russia

The Russian government’s attitude toward cryptocurrency remains somewhat contradictory.

In January 2018, the Russian parliament began work on a bill regulating the usage of digital assets. Multiple delays have crippled the adoption of the bill, which still remains under consideration as of February 2020.

Though Russia’s new Prime Minister identified the digital economy as one of the government’s key priorities, progress is not uniform. Despite solid support for blockchain, the country’s regulators are still skeptical of cryptocurrencies. 

Alongside the complex decision-making process, several ministries and the central bank were reportedly considering a ban of cryptocurrency for payments in November, as well as plans for a legal framework to “confiscate” Bitcoin (BTC).

Tags
Blockchain
Regulation
Business
Law
Russia
Central Bank
Related Posts
Russia’s regulatory sandbox and the implementation of blockchain tech
The main challenge companies face when testing and implementing innovative technologies is the need to amend existing legislation. Developing and testing new products based on distributed ledger technology requires special conditions that are often inconsistent with existing regulations. The solution to this problem would be the introduction of a special “regulatory sandbox” regime. It means the creation of an ecosystem within which companies and state-owned enterprises can test their developments without legislative obstacles. Federal law No. 258, “On Experimental Legal Regimes in the Field of Digital Innovation in the Russian Federation,” came into effect on Jan. 28. It allows new …
Technology / Feb. 6, 2021
Fitch says proposed Russia crypto ban eases risks but curbs innovation
On Friday, credit rating agency Fitch published a research piece about Russia's proposed ban on cryptocurrencies. Although the report agreed with the Central Bank of Russia's (CBR) position that the ban would limit its financial system's exposure to risks, it also cautioned that such proposal could "hold back the diffusion of technologies that could improve productivity." In addition, Fitch warned: Suppose this slows the spread of crypto-driven innovations that, for example, improve the speed and security of payments or asset liquidity via tokenization. In that case, it could over time weaken this aspect of the Russian banking sector's operational environment …
Adoption / Jan. 28, 2022
Could Russia lead Eastern Europe’s crypto boom?
Not unlike many other jurisdictions around the world, Russia has come to recognize the potential benefits and risks flowing from cryptocurrencies by taking its first step to define and codify digital assets. The new Russian legislation dubbed “On Digital Financial Assets” sets a clear direction for the treatment of cryptocurrencies by authorities and how both individuals and businesses can handle them in everyday practice. Nevertheless, the new legislation may give pause to payments companies and fintech companies keen on expanding into the Russian market. While the approach of the Russian legislature toward cryptocurrencies — or digital assets, as they are …
Technology / Sept. 6, 2020
Russia Is Set to Create a New Regime for Tokenized Securities
Russian legislators have passed the nation’s first crypto law after discussing crypto regulation for the last five years. The bill, titled “On Digital Financial Assets,” has had dozens of versions that have varied from one another massively. The version that was discussed last year didn’t have any identification of any digital currencies whatsoever. Another bill presented this year proposed jail sentences for buying large amounts of crypto with cash and large fines for smaller amounts. While the current version mentions digital currencies, it is not going to send Russian traders to the decentralized gulag. Basically, it restricts buying goods and …
Technology / Aug. 8, 2020
Vladimir Putin says cryptocurrencies 'bear high risks'
On Tuesday, Vladimir Putin, President of the Russian Federation, voiced his criticism regarding the state of the criticism sector at the "Russian Calling" investment forum in Moscow. According to local news outlet lenta.ru, the president made the following remarks, as translated by Cointelegraph: "It is not backed by anything, [and] the volatility is colossal, so the risks are very high. We also believe that we need to listen to those who talk about those high risks." Putin called for the greater monitoring and regulation of cryptocurrencies and pointed out that certain countries worldwide are seeing significant adoption of digital currencies. …
Blockchain / Nov. 30, 2021