Russia Stock Exchanges to Trade Bitcoin

The Central Bank of Russia opens the possibility for stock exchanges to enter the cryptocurrency market in that country.

Stock Exchange
Russia Stock Exchanges to Trade Bitcoin (Photo by Oren Elbaz on Unsplash)

In Short

  • Information systems operators were skeptical about the initiative.

  • The fintech sector believes that the measure may lead to excessive regulation.


Russia is preparing a new maneuver to make room for bitcoin (BTC) and cryptocurrencies in the Russian economy. The Russian Central Bank offered the country's stock exchanges the possibility of integrating crypto-asset trading into their platforms.


During a private meeting with brokers, operators of the Moscow Stock Exchange, the SPB Exchange, and a group of companies related to companies in the Eurasian country's cryptocurrency industry, the financial institution proposed to discuss a new plan to organize the trading of digital assets, according to statements offered by a spokesperson to the Russian newspaper Kommersant.


This newspaper points out that the plan for the exchanges is to trade bitcoin with the exact mechanism used to trade shares. It adds that a representative of the Moscow Stock Exchange told them that he found the Central Bank's proposal interesting, claiming to be interested in the initiative and willing to discuss it further.


"The concept involves using existing exchange and settlement infrastructures of stock exchanges for trading crypto-assets, which will contribute to the concentration of liquidity. A fact confirmed in the global practice of secondary circulation of digital and fiat assets."

Another source of the Russian newspaper assured that stockbrokers supported the Central Bank's proposal, as for them, it represents expansion in the number of financial instruments they can offer.


Blockchain integration

However, beyond the positive comments of some of the meeting mentioned above participants, other stock market operators were skeptical about the proposals. They believe that trading cryptocurrencies in stock exchanges "will quickly kill the business of digital platforms that have not had time to develop."


They also argue that technical difficulties will arise due to incompatible blockchains, slow exchanges, and other obstacles. The decision will force stock exchanges to acquire bitcoin, so it is not clear how these platforms could handle cryptocurrencies.


Denis Iordanidi, CEO of Russian fintech Lighthouse, says you should take the Russian regulator's initiative with caution. He expressed that, given the current legislation, there is "a risk to equate the activities of the cryptocurrency exchange operator to the activities of the organizer of a stock auction."


Moreover, this could lead to the need for proper licensing and, ultimately, to excessive regulation of the exchange market. On this, Vladimir Potapov, CEO of VTB Capital Investments, believes that "it is premature to make decisions of this kind concerning a market that is just beginning to take shape."



Cryptocurrency Regulation

Although it was not clarified, you could frame this new initiative within a draft law that will regulate Bitcoin and the cryptocurrency sector recently presented by the Russian Ministry of Finance. In this case, the Central Bank's present proposal would seek to take control of the crypto-asset market. It is worth remembering that the Bank is opposed to bitcoin regulation, and its position has been contrary to the law proposed by the Ministry of Finance.


Lawmakers have already sent the Ministry of Finance bill to the Executive body seeking to assert firm control over bitcoin operations. According to the proposal, Russians will be able to carry out operations linked to digital currencies only through banks, using a bank account. Although it is now possible that stock exchanges may also participate in cryptocurrency trading if this Central Bank of Russia proposal integrates into the law.

This plan could be part of an attempt by Russia to give more mobility to its economy after the United States and the European Union applied solid financial sanctions for the attack against Ukraine.



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