Recently, the Central Bank of Russia (CBR) published a report regarding the future of the digital asset sector in the country.
CBR’s report extensively explores the development of the market for digital financial assets (DFAs) and utility digital rights (UDRs) along with legal terms partially covering cryptocurrencies and tokens.
It believes that additional regulations are needed for improving the DFA framework and resonate with the regulations governing the traditional financial industry. The bank also counts on this move to further increase investment, circulation, and liquidity amidst the provisions to ensure better investor protection. In September, Russia announced plans to launch its regulatory framework for crypto by December.
One of the aspects that are extensively reviewed in the report is taxation. The bank has recommended offering tax incentives to long-term holders of DFAs and UDRs, proposing the adoption of a new regime whose mechanism is similar to the regime wherein the individual investment accounts are subject to special tax slabs.
It was introduced with the intent to attract free funds for citizens to the country’s securities market. Additionally, it mentions the need for discussions with relevant government institutions along with industry participants before finalizing such tax changes. The bank also intends to open discussions on listing digital assets on the existing exchanges and transactions of digital assets through intermediaries.
The bank also hopes the new recommendations will create new opportunities for the country’s citizens and corporates, ease the digital assets’ transaction process and digital rights and also optimize operating costs. It also hopes to see improvements in the process of identification applied to DFA holders.
A news publishing house quoted that the monetary regulator sees this process of identification as facilitating the foreign DFAs’ entry into the country’s financial market, adopting the set of rules implemented on smart contracts, and also developing necessary accounting procedures.
Additionally, the bank is also awaiting feedback on other proposals including the ideas to facilitate the tokenization of assets like securities and bonds, expensive stones and metals, property rights in form of NFTs, and claims secured by mortgages.
The institutional debate over the status of decentralized assets like cryptocurrencies has been going on for a long and in the meanwhile, Russia has been hoping to broaden its regulatory framework for DFAs.
Initially, the bank was against the use of cryptocurrencies in the country but with the ongoing geopolitical tensions, it had to consider using crypto for cross-border payments.