Bank of Russia: Crypto Adoption Represents “Unjustified Risk”

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The Bank of Russia sees the adoption of cryptocurrency as carrying an “unjustified risk” to consumers, according to Alexei Guznov, the bank’s legal department director. In an interview with Russian news agency Interfax, Guznov added that he was “opposed” to the existence of cryptocurrency exchanges and the only reason for regulating them was because it was easier than trying to ban them.

Backdoor Built into Exchanges and Wallets?

Guznov was discussing the Financial Assets Bill, which was first tabled in 2018 but has since seen major changes, particularly around how cryptocurrencies are to be treated. This has resulted in the bank striking a distinctly negative tone on cryptocurrency use in the country, with a number of eye-raising suggestions made.

The first concerns how domestic crypto ownership will be dealt with. Guznov cites an example of a legal dispute where Bitcoin ownership forms part of an individual’s assets but bailiffs or the court system cannot access it due to the holder claiming he has forgotten or lost the keys:

We could not ignore this, and therefore the project involves obliging the operator of the information system where the release of digital financial assets will be carried out, if necessary, provide access to them.

Guznov is essentially saying that a backdoor might be built into wallets and exchanges that the authorities can access, despite it being “somewhat inconsistent with the ideology of the notorious Bitcoin”. He also adds that digital financial assets might be “secured by the property of their issuer or third parties”, which would seem to put an undue burden on token issuers such as exchanges.

Bank of Russia “Opposed” to Crypto Entities

Guznov also had hard words for cryptocurrency advocates in general, stating that, “We are opposed to the fact that there are institutions that organize the release of cryptocurrency and facilitate its circulation.”

This hard-line approach is consistent with a surprisingly negative tone adopted by Guznov and the bank, surprising because it seemed that the Russian authorities were warming to the idea of cryptocurrency and blockchain technology. In January last year, the Chairman of the Parliamentary Financial Markets Committee, Anatoly Aksakov, backed a plan to allow companies in certain regions and sectors trial the use of cryptocurrencies.

If the Financial Assets Bill is passed in its new form however, it seems that cryptocurrency fans will have a hard time doing business in their own country and may have to either succumb to draconian restrictions or find ways to conduct business outside of the country.