The Bank of Russia has recently proposed a controlled experiment allowing a limited group of investors to trade cryptocurrencies. This initiative is spurred by a directive from President Vladimir Putin. The plan includes an experimental legal regime (ELR) lasting three years, allowing only particularly qualified investors to conduct cryptocurrency transactions, as per a statement from the central bank.

Key points to note:

• The proposal establishes that individual investors must have over 100 million rubles (approximately $1.14 million) in investments or an annual income exceeding 50 million rubles ($570,000) to be deemed as ‘particularly qualified.’ Institutions recognized as qualified investors may also participate in cryptocurrency trading.
• The initiative aims to create standards for crypto-related services and boost market transparency while offering investment opportunities for experienced investors who are willing to take higher risks.

The Bank of Russia has reiterated its warnings regarding the volatility and risks associated with the cryptocurrency market, underscoring that these assets lack jurisdictional backing. Furthermore, they propose prohibiting cryptocurrency transactions between residents outside the ELR, instituting penalties for violations.

In addition to direct trading, qualified investors would have access to derivatives and securities linked to digital assets, as long as there is no direct ownership of cryptocurrency.

This marks another step in Russia’s engagement with cryptocurrency, following the legalization of mining and the introduction of an experimental regime for cross-border settlements and exchange trading in digital currency last year. The central bank is also pursuing support from major banks to facilitate a digital ruble for consumer and commercial transactions by the end of this year, particularly in light of the sanctions imposed after the invasion of Ukraine.