Russia is working on ways to legalize and regulate decentralized financial organizations, popularly known as DAOs, to bring more liquidity within the local Digital Financial Assets (DFA) market.
The Director of the Department of Financial Policy of the Ministry of Finance, Ivan Chebeskov, made the comments at the Crypto Summit 2023.
Amidst the impact of internationally imposed sanctions on Russia, the country appears to be directing its attention toward legalizing a new and decentralized form of finance known as DAO. This move aims to inject excitement into the markets while adhering to the principles of decentralization.
A DeFi DAO is simply a Decentralized Autonomous organization that leverages blockchain technology and smart contracts to manage different types of financial transactions in a highly decentralized manner. DeFi DAOs will breathe life into Russian markets owing to the bulk of popular activities like lending, exchanging, and storing digital assets, staking, and more.
This move from the Russian government is seen as a way to bring more liquidity to the market in light of recent sanctions. When speaking at the summit, Chebeskov said;
“We actively advocate for the development of DFAs, yet we understand that DFAs alone will not ‘take off’; we need a connection between DFAs and the decentralized world of finance to utilize the existing liquidity in decentralized finance.”
After Vladimir Putin, the Russian president, signed into law the DFAs bill in 2020, the country has been struggling to attract investors. Chebeskov further notes that, at the moment, reports indicate that only 10 platforms have been registered via the Bank of Russia.
There is still hope that the DFA market will pick up, and the possible legalization of DeFi DAOs could accelerate the process.
The Director, therefore, said Russia understands that “in order for both DFAs and decentralized finance in general to develop more actively, the DAO needs to be legalized.”
However, unlike in countries where DAO may require new definitions before legalization, Chebeskov noted that there is no such need in Russia. He hopes that following the legalization, the DAOs will perform well.
Since the dawn of the chaotic Russian invasion of Ukraine, the nation has suffered sanctions from several major economies led by the US. Amidst the vilification, Russia and its investors have been quite inventive to evade sanctions.
Last year, reports suggested that local investors could use cryptocurrency to avoid sanctions. Later, in 2022, rumors of Russia legalizing crypto specifically for international trade occurred.