Russian Lawmaker Warns Investors of the Inherent Risks in Digital Currencies

Russian lawmaker, Alexei Savatyugin, who doubles as the Auditor of the Accounts Chamber (the parliamentary body that deals with financial control) has extended another bout of caution to digital currency investors in the country, reminding them of the risks inherent in the nascent asset class. According to the auditor, the inherent value of crypto assets is only dependent on the optimism of market investors which can be unreliable.

“Those who invest in cryptocurrencies should be aware that, unlike full-fledged money or bonds, they have no intrinsic value, they are not backed by anything. Unlike stocks, they do not give the right to receive payments or participate in business, unlike fiat money, they are strongly limited as a means of payment. That is, cryptocurrency depends only on the optimism of market players, and these are very high risks, “Savatyugin said 

Despite the uncertainties that surround these assets, Savatyugin said their growth, and popularity even on Russian soil has made them big enough not to be neglected. As such, he is recommending some forms of regulation for the cryptocurrency industry.

“The total capitalization of cryptocurrencies exceeds $ 2 trillion – this is more than the entire capitalization of the Russian stock market. It will not be possible to ignore this, including in Russia, many people mine, invest in cryptocurrencies. This means that it is time to introduce some kind of regulatory regulation,” he said.

Aligning With BOR’s Position

While the Russian State Duma has set up a working group to regulate crypto mining, there is no comprehensive regulation to govern the new crypto asset class, however, the Bank of Russia (BoR) has a hard stance on the space. 

The Russian lawmaker said his agency has not yet developed its own frameworks to address digital currency growth. However, he said he aligns with the position of the Bank of Russia (BoR), as well as other ministries and agencies drawing out a 3-tier framework to curtail the growth of digital currencies.

“Our legislation does not allow paying in bitcoins, this is not a means of payment. Given the rather tough position of the Central Bank and other authorities, there will hardly be any softening in this regard. And it seems to me that this is correct,” Savatyugin said.

Beyond Russia’s apex bank, other monetary watchdogs around the world including the People’s Bank of China and the Central Bank of Nigeria amongst others also have a non-favorable stance on digital currency proliferation.