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Russia at Odds Over Cryptocurrencies as Central Bank Digs In

Russia at Odds Over Cryptocurrencies as Central Bank Digs In

(Bloomberg) -- Russian officials are wrestling with central bank Governor Elvira Nabiullina to allow the trading of cryptocurrencies on “official” exchanges, including the main Moscow bourse, as enthusiasm for digital financial instruments surges.

The Finance Ministry will use the “power of words and thoughts” to persuade the Bank of Russia, which continues to resist calls to legalize trading, Deputy Finance Minister Alexei Moiseev told reporters in Moscow on Thursday. “The central bank still doesn’t support our proposals.”

Governments around the world are increasing scrutiny of digital currencies as soaring prices attract everyone from mom-and-pop investors to Wall Street banks. While President Vladimir Putin in October called for building a “regulatory environment” for cryptocurrencies based on international experience, Nabiullina has called them “pyramid schemes” and said she’s “totally opposed” to private money.

On Thursday night, Putin backed the central bank, saying it’s right to be cautious. There may be a need for legislation because cryptocurrencies aren’t secure, he said.

According to Moiseev, it’s too early to say which criteria would be used to select an appropriate trading venue. Still, it would have to be a Russian platform and the Moscow Exchange is one of the options being considered, he said.

The Finance Ministry aims to standardize the trading of cryptocurrencies “in some way,” but doesn’t plan to impose any limits on buying and selling, Moiseev said. The ministry is preparing to introduce a bill on new financial technologies to parliament in February, he said.

Unregulated Markets

The question of digital-currency trading is under discussion as part of the development of the law and additional comments at this stage are “premature,” the central bank said through its press service.

Much of the trading of cryptocurrencies currently takes place on mostly unregulated markets, not the regulated ones where stocks, bonds and other conventional assets change hands.

Moscow Exchange Chief Executive Officer Alexander Afanasiev said on Dec. 21 that the bourse doesn’t plan to launch bitcoin futures trading any time soon due to a lack of regulatory clarity. The exchange can organize trading of a particular financial instrument if there’s sufficient demand, its press service said. While it’s possible to trade the cryptocurrencies themselves as well as derivatives and exchange-traded funds linked to them, derivatives trading is “faster and easier” to organize, according to the exchange.

Calling for Caution

Policy makers around the globe have been calling for caution in dealing with cryptocurrencies. In December, just weeks after allowing CME Group Inc. and Cboe Global Markets Inc. to start offering bitcoin derivatives, the U.S. Commodity Futures Trading Commission issued a statement detailing “the risks of virtual currency trading” and urged investors to educate themselves before buying such instruments.

Bitcoin slumped on Thursday as South Korea’s justice minister reiterated his proposal to ban local cryptocurrency exchanges after the nation emerged as something of a ground zero for the speculative mania, playing host to several of the world’s most active exchanges.

To contact the reporters on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net, Anna Baraulina in Moscow at abaraulina@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Alex Nicholson, John Viljoen

©2018 Bloomberg L.P.