Only for foreign trade: Bank of Russia stands against free crypto investment

Russia’s central bank is ready to consider allowing cryptocurrency use within the country, but only as part of a legal experiment, said governor Elvira Nabiullina.

“It’s possible to consider transactions through an authorized organization in the country as part of an experimental legal regime, but that would require a relevant law,” Nabiullina stated during a Bank of Russia press conference on Dec. 16.

The Bank of Russia’s primary objection to crypto has always been that it cannot be used as a payment instrument, Nabiullina emphasized. She added that the central bank is also concerned about investor protection because the crypto market is highly volatile.

While Russia formally does not prohibit its people from investing in crypto, the Bank of Russia believes that the mass adoption of crypto would inevitably lead to its use as a payment method, according to Bank of Russia deputy governor Alexey Zabotkin. He stated:

“If you allow free circulation of cryptocurrency as an investment tool within the country, then inevitably, with the expansion of its ownership, it will become more widely used as a means of payment. It will be impossible to prevent this.”

As such, if adopted, Russia’s experimental regime will be used in favor of cryptocurrency usage within Russia, but “only to support foreign trade,” Zabotkin stressed.

The latest news brings some clarity to why the Russian central bank has been so negative toward the adoption of crypto as an investment tool in the country.

Russia’s major crypto law, “On Digital Financial Assets,” officially prohibited the use of cryptocurrencies like Bitcoin (BTC) for payment purposes in 2020. The law did not ban Russians from investing in crypto, but local crypto exchanges have remained unregulated.

While not willing to allow Russians to use decentralized finance tools like Bitcoin locally, the Russian government itself doesn’t want to miss out on the benefits of decentralization on a global scale. In late November, President Vladimir Putin criticized the monopoly in global financial payment systems, calling for an independent, blockchain-based settlement network.