Russia to Allow Limited Crypto Trading for High-Net-Worth Individuals

The Bank of Russia is poised to introduce a groundbreaking experimental legal framework that will permit limited cryptocurrency trading for high-net-worth individuals. This move signifies a notable shift in the country's regulatory approach towards digital assets, aiming to create a controlled trading environment to evaluate market operations and regulatory impact.

The new framework, set to last for three years, is designed to foster a regulated environment for cryptocurrency transactions. This initiative will allow transactions within a controlled setting, operating under strict regulations to test market operations while ensuring oversight and compliance. The central bank's goal is to enhance market transparency and investor protection while addressing the associated risks of cryptocurrency investments.

Access to this experimental trading environment will be restricted to a new category of “highly qualified” investors. These individuals must meet specific criteria, such as having invested at least 100 million rubles in securities or deposits or earned over 50 million rubles in the past year. Additionally, companies classified as qualified investors under existing regulations may also participate. Financial institutions seeking exposure to cryptocurrencies will be subjected to specific regulatory requirements based on the associated risks.

“The introduction of the ELR aims to increase transparency in the cryptocurrency market, establish service standards, and expand investment opportunities for experienced investors willing to take on higher risks,” stated officials from the Bank of Russia. They further emphasized the importance of investor education regarding the volatility and risks of cryptocurrency investments. As Russian businesses have expressed their interest in granting qualified investors access to crypto trading, this new framework aligns with those aspirations. The primary objective of the ELR is to establish a secure and regulated cryptocurrency trading environment in Russia, with Finance Minister Anton Siluanov outlining various strategies for potential legalization.

Currently, while Russians can buy and hold cryptocurrency, using it for payments within the country remains prohibited. The absence of a national exchange has led citizens to rely on foreign platforms, highlighting the need for a domestic framework. In conjunction with the new trading framework, Andrey Bershadsky, CEO of asset management firm “Pervaya,” has suggested allowing structured exposure to cryptocurrencies via mutual funds. Bershadsky advocates that professional asset managers could provide a safer entry point into the cryptocurrency market, minimizing risks for inexperienced investors.

“Providing market exposure through professional asset managers and collective investment instruments would be a major shift for our industry. New investors are entering this segment but are currently forced to invest through platforms that are unregulated under Russian law,” Bershadsky stated. At this juncture, only digital financial assets (DFA) are set to be included in certain mutual fund categories, with the Bank of Russia actively working on the necessary regulatory amendments since last May.

The Bank of Russia’s move to initiate a regulated cryptocurrency trading framework for high-net-worth individuals represents a forward-thinking approach to balancing innovation and regulation in the digital asset space. As the ELR unfolds, it has the potential to reshape how cryptocurrencies are perceived and traded within Russia, paving the way for broader adoption and potentially more inclusive investment opportunities in the future.