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Russian Central Bank Sounds Further Warnings on ICOs and Digital Currency

The Russian central bank has ramped up its criticisms of ICOs and cryptocurrencies more generally, following a new statement highlighting what it perceives to be the risks of engaging in digital currency transactions.

The Bank of Russia issued the statement in response to the growing popularity of initial coin offerings, which have raised billions so far for companies, outside the parameters of existing securities laws.

It also comes at a time of increasing prominence for digital currencies and ICOs in Russia, with a close aide to Vladimir Putin even suggesting he was preparing his own ICO.

The Russian government has taken a somewhat restrictive approach to the sector, and is actively preparing legislation that would seek to restrict access to digital currency markets to only qualified investors.

Similarly, senior Russian government officials have pointed to the dangers of engaging in speculation on digital currency markets, and have pushed forward calls to tighten up legislation around the space.

The bank said that at this time, it would be unprepared to approve digital currencies for trading on any of Russia’s formal securities exchanges, nor sanction use of the underlying technology in commercial development — a stance that would effectively inhibit all development of blockchain-based solutions throughout the country.

While this moves beyond the remit of the Bank of Russia and into the realms of the country’s financial regulator, the Ministry of Finance, it nevertheless indicates support for the more restrictive approach being taken by the government toward digital currencies, ICOs and the underlying technologies driving them.

According to a translation of the bank’s statement, the bank said the “high risks” involved in cryptocurrency meant it was currently unsuitable as a device for investment.

“Given the high risks of circulation and use of cryptocurrency, the Bank of Russia considers it premature to admit cryptocurrencies, as well as any financial instruments nominated or associated with cryptocurrencies, to circulation and use at organized trades and in clearing and settlement infrastructure on the territory of the Russian Federation for servicing transactions with cryptocurrencies and derivative financial instruments on them.”

The statements, in particular sections focusing on ICOs, reflect a similar tone struck in recent weeks by authorities across the world, as increasing concerns mount over the unregulated nature of ICOs.

In voicing these concerns, Russia joins the U.S., Canada, Singapore, Hong Kong and China, albeit joining the latter in expressing a significantly more restrictive view of the positives that come from distributed ledger technology.

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