Russia’s strict stance on cryptocurrency transactions and investments in the country is well known. Many Russian officials and ministers have spoken about the dangers of crypto multiple times. One common argument is that cryptocurrency has the potential to destabilize the Russian economy. The same argument has been heard in other countries, like the United States of America. To further deter investors from accessing digital assets, the Bank of Russia banned mutual funds from investing in Bitcoin or any digital asset. However, the overall number of areas where mutual funds can invest has increased due to the Bank of Russia’s mandate. The only notable exclusion has been cryptocurrencies.
While Russia does not allow institutional investment in digital assets, it does allow stock investment in companies that work with digital assets. Even Russia’s largest bank, Sber, is planning to offer investments in blockchain-based companies. Despite allowing investments in the crypto sector, Russia has been strict about investing in digital assets. The official statement from the Bank of Russia on 13th December 2021 said that mutual funds are not allowed to ‘expose’ experienced or inexperienced investors to Bitcoin or any crypto-backed investment instrument.
The argument from the official side revolves around protecting investors from losing all their money. Since Bitcoin investments are not covered under any compensation scheme, it becomes very difficult, if not impossible, for investors to get any money lost to scams or frauds. The implication of Russia’s ban on mutual funds investing digital assets is still not clearly understood in the broader context.