The Bank of Russia (BoR) unveiled the results of the test of the new technology of the distributed registry for recording crypto transactions, launched in April. The Bank of Russia tested the technology of the distributed registry for recording transactions with cryptocurrencies and tokens. To clarify, a distributed registry is a public digital ledger used for recording and confirming transactions in virtual currencies such as Bitcoin. The blockchain is a distributed registry. The distributed registry is the basis of a distributed ledger.
The Bank of Russia has already made it clear that it doesn’t like cryptocurrencies, and it’s now announced that it’s running tests on how to develop services for the “safe” use of crypto-related technology. “The prototype of a cryptocurrency-based financial system will be put to test in one of the Bank of Russia’s Financial Monitoring Departments. The prototype will be designed to test the efficiency of the proposed system and estimate its compliance with technological and security standards,” the bank said. The activities will be undertaken in partnership with representatives of the domestic banking system, its statement read.
The Russian Central Bank has inspected three platforms offering crypto currency services. The projects were tested in its regulatory sandbox in 2020. The Bank of Russia has received dozens of applications to test various financial services since the introduction of the closed regulations about three years ago.
CBR: trial of 3 cryptographic projects in 2020
The Central Bank of the Russian Federation (CBR), also known as the Bank of Russia, launched Sandbox in 2018 as the development of financial technologies and decentralized digital assets presented new challenges to regulators. Since the launch of the initiative, more than 70 organizations, including financial institutions and fintech companies, have asked the regulator to test their new products, services, technologies and business models.
The CBR’s just-released 2020 annual report shows that the bank approved three cryptocurrency platforms for the sandbox last year. The central bank inspected the operations of a cryptocurrency mining pool, a cryptocurrency payment system and a digital asset investment platform, RBC reported. No details of the results of the current test have been disclosed, but if the result is positive, the Bank of Russia is expected to submit a roadmap for integration into the legal framework of the Russian financial sector.
Bank of Russia provides secure space for cryptographic projects
In July, the Russian parliament passed a federal law providing for the introduction of special legal requirements to test digital innovations, including in the financial sector. The central bank uses its regulatory safe harbour to examine the potential impact of such projects in an isolated setting and to identify the risks of innovative financial services and technologies. The CBR may also determine the measures to be taken to create the conditions for its application in the market.
The Bank of Russia has opposed the legalization of cryptocurrencies in the country in the past, but has proposed allowing the mining of cryptocurrencies on the condition that miners sell their coins outside Russian borders. With the passage of the Digital Financial Assets Act in January, digital coins are now recognized and regulated as property.
However, Russians are not allowed to use cryptocurrencies for payments, officials are not allowed to own cryptocurrencies, and investments for ordinary citizens are restricted. Earlier this year, an annual limit of 600,000 rubles (about $8,000) was introduced for investments in cryptocurrencies by unqualified market participants.
The central bank is currently working on a digital ruble project and is expected to unveil the first prototype of the CBDC platform by the end of the year. If all goes according to plan, the test phase should begin in 2022. Last summer, following consultations with Russian financial institutions, the central bank unveiled an updated concept for the digital ruble, which aims to create a more convenient digital currency for the banking sector.
What are your thoughts on testing cryptocurrency-related products and services in regulatory sandboxes? Share your thoughts on this topic in the comments section below.
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