Bank of Russia prohibits mutual funds from investing in cryptocurrencies

The central bank of Russia continues carrying a hard stance towards the crypto industry. It has now officially banned mutual funds from investing in digital assets like Bitcoin (BTC).

The bank of Russia on Monday announced an official statement on investment opportunities regulations over mutual investment funds.

The report says that the document restricts fund managers from purchasing cryptocurrencies and financial instruments as their value depends on the prices of cryptocurrencies. However, the regulators have expanded the number of assets available for investments by mutual funds. 

Mutual funds are not permitted to provide crypto exposure to qualified or unqualified investors, according to the announcement.

In July 2021, the Bank of Russia advised asset managers to restrict cryptocurrency from mutual fund exposure. Despite the lack of a legal ban, there have been no Russian mutual funds with crypto exposure, according to a report by local news agency RBC.

Russia has only one industry-related ETF

Russia now has only one industry-related ETF, according to Artem Deev, head of the analytics department at brokerage company AMarkets.

As per the statements by Deev, the fund is managed by “BrokerCreditService,” a joint-stock management company that invests in firms like Jack Dorsey’s Block, PayPal, and Broadcom that focus on decentralised data storage and blockchain. Russia’s largest bank, Sberbank, is planning to launch a blockchain-focused exchange-traded fund, according to Vasily Illarionov, the bank’s asset management chief.

According to Sber’s asset management chief Vasily Illarionov, Russia’s biggest bank is aiming to introduce a blockchain-focused ETF. The ETF will be dubbed “Blockchain Economy” and will invest in blockchain-related stocks. The fund, according to Illarionov, is not subject to Bank of Russia limitations and can be marketed to ordinary investors.

Two years back, the country declared cryptocurrency under the property class. The president of the nation, Vladimir Putin, recently said that digital assets bear high risks for Russia. The head of the Federal Taxation Service (FTS) of Russia also sang along with the president by saying that crypto can potentially erode the tax base of the nation.