Bank of Russia Suggests NFT, Smart Contract Regulation

November 11, 2022

By Sharan Kaur Phillora

Amid a barrage of global financial sanctions, the Central Bank of Russia (CBR) is exploring ways to incorporate crypto assets and blockchain technology into its domestic financial system, as stated in a report published earlier this week titled “Digital Assets in Russian Federation.”

Here’s what we know:

According to the CBR, short-term regulation should focus on protecting investor rights, strengthening rules for admitting a digital asset into circulation, ensuring the issuer is accredited, and disclosing all relevant information to investors.

The CBR’s 33-page report, however, made no mention of the increased sanctions imposed on Russia and the crippling effect they have had on its economy, nor did it discuss the Russia-Ukraine War that is currently taking place in Ukraine.

Other areas of focus in the report are digital asset regulation, retail investor protections, digital property rights related to smart contracts and tokenization, as well as reformed accounting and taxation proposals.

The CBR stated that it strongly supports the “further development of digital technologies” provided they don’t create “uncontrollable” financial or cybersecurity risks for consumers.

Despite the nascency of blockchain technology, CBR said the same regulatory rules concerning the issuance and circulation of traditional financial instruments should also extend to digital assets.

The Central Bank’s message, originally written in Russian, translates to “Russia has created the necessary legal framework for the issuance and circulation of digital assets […] But so far the market is at the initial stage of its development […] and is many times inferior to the market of traditional financial instruments. Its further development requires improved regulation.”

CBR mentions a separate report it is working on, focusing on Russia’s new central bank digital currency (CBDC) — the digital ruble —which is expected to be piloted in early 2023.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.