Bank of Russia wants to ban investment funds from investing in cryptocurrencies – regulation

The Russian Central Bank intends to ban investment funds from acquiring crypto assets or related financial instruments. The proposal, in line with its tough stance on decentralized digital money, comes after the regulator urged exchanges to avoid trading securities tied to cryptocurrencies.

Central Bank of Russia Publishes Draft Directive Banning Crypto Investments for Mutual Funds

The Central Bank of the Russian Federation ( CBR ) is taking steps to prevent mutual funds from investing money in digital currencies like Bitcoin. The restrictions would also apply to derivatives whose value depends on the fluctuation of their prices or the prices of securities tied to digital assets.

The monetary authority explained the move with the need to protect investors' funds and rights. The measure affects not only non-qualified investors, but also accredited investors. It is introduced by amendments to the CBR guidelines “On the composition and structure of the assets of equity funds and assets of investment funds” from 2016.

Bank of Russia recently published the changes for discussion. The window for receiving feedback and suggestions on the draft document will be open until December 27th. The regulator presented the new regulations after warning asset managers earlier this year not to include crypto assets in their investment funds.

In July the CBR advised Russian stock exchanges to avoid listing cryptocurrency-based instruments and recommended that brokers and trustees offer “pseudo-derivatives with such underlying assets” to unqualified investors. The authority later stated that it would not make it easier for such investors to access crypto and rejected the provision of related financial services.

Survey results released this month indicate However, alternative assets such as cryptocurrencies account for more than half of non-qualified investor portfolios in the country. At the time, 46% of the 1,000 survey respondents admitted that they viewed digital currencies as a future hedge.

Media reports quoting the head of the key Financial Markets Committee, Anatoly Aksakov, revealed in October that lawmakers in the State Duma, the lower house of the Russian parliament, will consider restrictions on retail investors on crypto purchases. Officials in Moscow have been discussing the idea for some time.

In October 2020, the Bank of Russia proposed an annual limit of 600,000 rubles (just over $8,000), also gathering public opinion at the threshold. At the time, the limit was expected to be included in the Law “On Digital Financial Assets,” which came into force in January, but that did not happen.

Do you think the Bank of Russia's proposal to ban investment funds from investing in cryptocurrencies will gain enough support? Share your expectations in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy journalist from Eastern Europe who likes Hitchens' quote: "Being a writer is what I am, not what I do." In addition to crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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