Cryptos Are No Danger to The World of Finance, Says Russia’s Central Bank

Cryptos Are No Danger to The World of Finance, Says Russia’s Central Bank

Bitcoin and its brethren do not pose any threat to the global financial system due to the fact that the overall volume of cyber assets financial operations is not high enough. This is the conclusion made by the central bank of the Russian Federation.

On May 30, the country’s Central Bank published a report, in which there was stated the institution’s precise position on the dangers that come from digital tokens.

No Danger…

In the overview of financial stability, released by Russia’s Central Bank, the term “cryptocurrencies” is not used. The Financial Stability Board referred to this phenomenon as the “crypto assets.” According to that, cryptos can be considered as financial assets underpinned by the use of cryptography as well as DLT, or, as it is better known, the blockchain.

In the Russia’s top government’s document, it is emphasized that digital assets are no risk to the stability of the traditional financial world. The reason is that at the moment, as the bank stated, the volume of conducted crypto-transaction is very low when compared to other types of global operations. Ultimately, it was noted in the document that the crypto-niche is very inessential on the worldwide market.

…until The Market Grows

However, the status-quo may not remain for always. Bitcoin and its ilks can really pose risk to worldwide financial stability in case the crypto-market expands and conquers more attention from:

  • institutional investors
  • retail investors
  • financial establishments (like banks)
  • other market actors

At the same time, the current price instability of cryptos is the primary factor which prevents them from becoming:

  1. A credible standard of value
  2. Means of exchange
  3. Store of value

Still Not Safe To Pile Into Cryptos

On top of everything, the document also delineates a range of risks related to the purchase of cryptos (or the investment in them). Among them, there are the following:

  • Insufficient investors’ rights protection
  • Risks in the sphere of funds laundering prevention
  • Jeopardies in the niche of terrorism financing prevention
  • Lack of market liquidity
  • Operational threats
  • The use of leverage

Background

This year May the country’s State Duma adopted novel legislation to regulate cyber money sphere at first reading. The new law determines both cryptos and tokens as possessions. Moreover, it defines various peculiarities for dealing with tech trends, connected to DLT.

Interestingly, a week ago another Russian state-owned bank – Sberbank – on par with Russia’s National Settlement Depository unveiled its crypto-plan. The bank and the depository are launching a pilot of Russia’s first ICO.

According to the opinion of the head of the bank Igor Bulantsev, Russian token offerings niche has yet a lot to offer. The public figure also emphasized that lots of the bank’s customers are curious about the novel way of fundraising.

Earlier it was reported that Russia's top financial institution gathered that the wholesale markets in Moscow, e.g., shopping center "Moscow," "Sadovod" and "Food City," had become pathfinders and leaders in proposing the purchase of cyber assets.