Crypto risks and mitigation opportunities in Russia

Abstract

The position of national financial regulators in relation to cryptocurrencies is largely determined by the presence of risks of their use. Historically, the development of the crypto market has proved that fears seem to be well founded. Both internationally and nationally, there are mainly four types of risks associated with the use of cryptocurrencies: risks of violation of consumer rights; risks of money laundering and terrorist financing; environmental risks; risks to financial stability. Despite the risks being objective in nature and recognised by all financial regulators in the world, when forming a national legal regulation, each country should assess these risks based on its ability to manage them. The study showed that the risks of public costs in the circulation and use of cryptocurrencies are not destructive for the Russian financial market.Russia needs to adhere more strictly to a risk-based approach to regulating the crypto asset market. To manage risks, it is necessary to legalise the crypto asset market in Russia and create an appropriate market infrastructure. Only the legalisation of the turnover of crypto assets will ensure proper control over it, and, consequently, minimise the existing risks.