Crypto investors in Russia will soon find it difficult to escape plummeting interest rates in savings accounts as the Central Bank of Russia works to prevent capital flight.
As per a Dec 30 announcement, the Central Bank of Russia is working to get securities trading platforms to toe the line and follow “risk reduction” measures passed back in July. The latest Central Bank announcement recommends platforms and applications have systems to” secure the impossibility of executing on-platform trades resulting in the acquisition of stocks or other securities from foreign issuers by unqualified investors.” except those approved by the CBR.
The Russian central bank is also working to stop firms from offering “complicated investment products” which is basically leveraged trading or derivative products, to unqualified investors unless the firms offering those investments provide guaranteed returns of at least two thirds of the central bank’s key rate. With the Key rate at 4.25% currently, platforms would need to guarantee returns of 2.83%.
While a 4.25% key rate return is better than the return on a U.S savings account, the ruble’s instability since sanctions in 2014 and more recently the 2020 market crash means that rate is not guaranteed to Russian savings account holders.
The ruble’s instability has driven many Russians towards the stock market for the first time as they seek to preserve and even improve the value of their money. The crypto markets are also attractive to Russian investors seeking to preserve their net worth in uncertain times. The directive will be a blow to investment apps like Robinhood and others who have been capitalizing on struggling fiat currencies by offering securities and digital assets seen as havens against inflation and low interest rates.
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