The Bank of Russia has declared cryptocurrencies a risk to the financial market. The Central Bank fears that Russians will increasingly use digital assets, primarily stablecoins, as a substitute for the national currency.

The chief financial regulator expressed these concerns in its review entitled ‘Key Directions for the Development of the Financial Market of the Russian Federation for 2027 and the Period 2028–2029’.

Investments in digital currencies carry the risk of a total loss of the funds invested, insists the Central Bank. Unlike traditional financial instruments, these ‘money substitutes’ have no liable party and no collateral — there is no one to make a claim against in the event of a collapse.

The Central Bank of the Russian Federation maintains that the anonymity of certain digital currencies and their circulation via decentralised networks increase the risks of their use in illegal activities. The problem with cryptocurrencies is that they circulate outside the jurisdiction of individual states, the Bank of Russia points out. According to the Central Bank, this undermines the effectiveness of any government restrictions or bans. At the same time, there is no uniform approach to regulating cryptocurrencies worldwide: some countries have already introduced strict rules, whilst others are only just beginning.

Ultimately, this creates conditions for the growth of the shadow market segment, and the measures taken by individual states may prove insufficient to contain the risks, the Central Bank warns.

Consequently, the Bank of Russia insists on holding currency exchange operators accountable: criminally, for those who organise the circulation of digital currencies without the regulator’s authorisation; and administratively, for legitimate market participants who breach the established rules.

Rosfinmonitoring, the main agency responsible for monitoring financial transactions, has been granted the power to oversee all cryptocurrency transactions — the relevant government law was passed alongside the law ‘On Digital Currencies and Digital Rights’.

A new rule is helping to ensure this oversight: to open an account with a Russian digital custodian, customers will be required to provide their taxpayer identification number (TIN).

The Bank of Russia has added cryptocurrencies to its list of risks to the financial market