The Russian central bank says that crypto assets do not constitute a risk to global financial stability due to very low involvement into the global financial system.
The Central Bank of Russia released a report May 30, stating that crypto assets do not currently threaten global financial stability as the global volume of crypto transactions is very low.
The research paper states that instead of the term “cryptocurrency,” the Financial Stability Board proposes to use the term “crypto asset,” which can be considered a financial asset based on the application of cryptography and distributed ledger technology.
According to the report, crypto assets do not pose a risk to global financial stability, because at present the volume of crypto asset transactions is very low compared to the scale of the global financial system. The relation of this segment to the financial system is insignificant, according to the report.
The paper states that crypto assets could constitute a risk to financial stability in the case of further market growth, large-scale involvement of retail and institutional investors, banks, and other market players. According the the central bank’s report, the high price volatility of crypto assets prevents them from being a reliable standard of value, means of exchange, and store of value.
Additionally, the paper outlines several risks connected to investment in crypto assets, including the lack of protection of investor rights, risks in the field of preventing money laundering and terrorism financing, lack of market liquidity, operational risks, and the use of leverage.
Earlier this month, the Russian State Duma approved the first reading of new legislation to regulate the crypto industry. The laws define cryptocurrencies and tokens as property, and lay out specifications for interacting with crypto and blockchain-related technologies.
Last week, Russian bank Sberbank CIB and the National Settlement Depository announced a pilot of the country’s first official Initial Coin Offering (ICO). Head of Sberbank CIB Igor Bulantsev said the bank considers the Russian ICO market to be “highly promising,” emphasizing that many of the bank’s clients “are interested in this new way of fundraising.”