Bank of Russia Suggests NFT, Smart Contract Regulation

Russia could create more detailed rules for taxing digital securities and utility tokens, but already has a sufficient regulatory environment to create a legitimate market for digital assets, the country's chief financial regulator said in a new consultative report published on Monday.

Digital assets may be regulated similarly to the traditional securities, in those cases when they have similar properties, the report says. However, if the underlying technology allows to manage consumer risks, a new regulatory approach can be developed, different from the one already in force for the securities market, the report said. The document mostly covers matters related to the digital assets issued in Russia according to the 2020 law On the Digital Assets.

The document suggests developing more detailed rules addressing the taxation of digital securities and utility tokens, as well as legal framework for tokenizing securities, debt, precious metals and stones, and issuing non-fungible tokens (NFTs) that certify property rights.

The bank of Russia also suggested including digital assets trading into the traditional stock market infrastructure. Rules of access to the digital assets market should be harmonized with the ones for the traditional securities markets, so that unqualified investors can access both within the 100,000 rubles a year limit ($1,640) or more, if they successfully complete a financial literacy test, the report suggests.

The regulator also sees a need to provide framework for allowing digital assets issued abroad to the Russian market, but only those which "comply with the quality requirements," for example, have an issuer and are backed by something.

The report also particularly mentions the necessity for regulating smart contracts.

The bank of Russia expects to receive comments for the report until Dec. 7.