Russia Launches Crypto Exchange for Qualified Investors

Russia has announced the launch of a crypto exchange designed for highly qualified investors, operating under the Experimental Legal Regime (ELR). This initiative, revealed by Anton Siluanov, the Russian Finance Minister, aims to legalize crypto assets and bring crypto operations out of the shadows. The move comes as part of a broader effort to integrate cryptocurrency into the country's financial system, following a law passed last September that allows the central bank to use cryptocurrency for foreign settlements within a pilot program.

The ELR will permit qualified investors, defined as individuals with deposits exceeding 100 million rubles or an annual income of more than 50 million rubles, to engage in crypto investments. The Central Bank has requested that certain crypto settlements, such as those involving crypto derivatives, be exempt from the ELR for qualified investors. These investments do not involve delivering cryptocurrency to the investor but rather link its value to a revenue and income stream. However, the government does not currently recognize digital currencies as a form of payment, which poses a challenge. One proposed solution is to ban settlements between residents outside the ELM and introduce penalties for violations.

Ivan Chebeskov, Deputy Finance Minister, highlighted that the existing infrastructure for exchanges could be utilized to facilitate transactions under the ELR. Additional platforms and exchanges may also be employed, with specific requirements to be met. These suggestions are part of a pilot program aimed at testing the safety and scalability of digital currencies. The announcement comes at a time when cryptocurrency has become a focal point in trade wars and financial sanctions, with Russia seeking to leverage digital assets to evade international restrictions.

Russia's move to establish a regulated crypto exchange is seen as a response to the disruption of digital asset markets worldwide. The country has faced significant challenges due to Western sanctions, which have impacted many private companies. The use of cryptocurrency is viewed as a potential means to circumvent these sanctions, as stated by Anton Siluanov. At the last BRICS summit, Russia also proposed the use of crypto to evade sanctions, further emphasizing its strategic importance.

The Moscow Exchange has expressed readiness to create a crypto derivatives market, with plans to have the platform operational by 2025. The Saint Petersburg Exchange has also indicated interest in establishing a crypto exchange, which could provide investors with more options and contribute to more diverse portfolios. The inclusion of crypto ETFs is also being considered, as they can be traded alongside traditional assets without additional regulation. This approach would allow 'super investors' to directly trade crypto assets, while retail investors could access crypto derivatives. The cautious approach to crypto adoption in Russia reflects ongoing pilot studies and the development of plans for a crypto derivatives exchange.