Only for foreign trade: Bank of Russia stands against free crypto investment

The Russian central bank is ready to consider allowing the use of cryptocurrencies within the country, but only as part of a legal experiment, Governor Elvira Nabiullina has said.

“It is possible to consider transactions through an authorized organization in the country as part of an experimental legal regime, but that would require a relevant law,” Nabiullina fixed during a Bank of Russia press conference on December 16.

The only objection of the Bank of Russia has always been that cryptocurrencies cannot be used as a payment instrument, Nabiullina emphasized. She added that the central bank is also concerned about investor protection because the crypto market is very volatile.

While Russia does not formally ban its people from investing in cryptocurrencies, the Bank of Russia believes that mass adoption of cryptocurrencies would inevitably lead to its use as a payment method, according to Bank of Russia Deputy Governor Alexey Zabotkin. He stated:

“If you allow the free circulation of cryptocurrency as an investment tool within the country, inevitably, with the expansion of its ownership, it will become more widely used as a means of payment. It will be impossible to avoid this.”

As such, if adopted, Russia's experimental regime will be used in favor of cryptocurrency use within Russia, but "only to support foreign trade," Zabotkin stressed.

The latest news sheds some light on why the Russian central bank has been so Negative to the adoption of cryptocurrencies as an investment. tool in the country.

Russia's main cryptocurrency law "On Digital Financial Assets" officially banned the use of cryptocurrencies such as Bitcoin (BTC) for payment purposes in 2020. The law did not prohibit Russians from investing in cryptocurrencies, but locals crypto exchanges have remained unregulated.

Related: Bank of Russia Wants to Ban Miners from Selling Crypto to Russians

While not willing to allow Russians to use decentralized finance tools like Bitcoin on a local level, the Russian government itself does not want to miss out on the benefits of decentralization on a global scale. In late November, Russian President Vladimir Putin criticized the monopoly in global financial payment systems and called for a Blockchain-based and independent settlement network.