Russia could soon limit the digital currency investment options available to ordinary retail investors. The country’s legislature is weighing a law that it says will protect investors from complex investment options, taking a cue from Hong Kong which has proposed a similar policy.
Anatoly Aksakov, the head of the Committee on Financial Markets at the Russian State Duma, confirmed the new proposed law at a recent event on the protection of consumer rights.
“Digital assets are a topic [that has] our close attention, and we will look at how to maximally protect our citizens when investing in digital currencies and digital assets, because [it’s] a new tool, and it is quite difficult for an unskilled investor,” the legislator stated.
While digital assets present a great opportunity for profitability for traders, they also present great risk, he told the attendees. Regardless of the risk, Russian investors are pouring billions of dollars into the sector, Aksakov observed. If left unchecked, it could present a risk not just to the individual investors, but also to the financial system at large, he believes.
“…we need to prescribe in the legislation the norms that will protect an unqualified investor in ill-considered investments in digital currencies,” he told the conference.
In limiting digital asset access to retail investors, Russia would be following a precedent set by Hong Kong. The special administrative region proposed limiting digital asset purchases to professional investors in May 2021. Hong Kong’s Financial Services and the Treasury Bureau (FSTB) claimed at the time that most digital asset products are too complex and risky for the ordinary retail investor.
The law has yet to be passed. If it takes effect, it would limit digital asset access to investors who have a portfolio of at least HK$8 million (US$1.05 million).
The restrictions on digital asset investing are not a surprise, Anatoly Gavrilenko, the founder of Russian financial services firm Alor Group noted. According to him, digital currencies give their users the freedom that central banks and other financial firms have sought to deny them for ages.
Speaking to Russian news agency Interfax, he stated, “Cryptocurrency is a symbol of freedom – financial freedom. It is a signal to all regulators that they can’t push people into a corner.”
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