While some banks around the world have issued a warning on the effect of digital currencies on the global financial stability, as they feel bitcoin and altcoins have become a combination of bubbles, Ponzi schemes and environmental disasters, the central bank of Russia think otherwise.
In a report released on May 30, the Russian central bank stated that digital assets are currently not a threat to the global financial stability.
According to the report which has been compiled following extensive research into crypto trading, the current volumes of crypto transactions are ‘very low’ or ‘insignificant’ when compared to fiat financial system.
It is only in the event of further market growth, large-scale adoption by retail and institutional investors, banks, and other market players would a potential threat be expected.
The high volatility of the market value for crypto assets, however, would mean that cryptocurrencies will for a long time play second fiddle to the traditional financial system regarding transaction volume.
In fact, it would take consecutive cryptocurrency value spikes, like that which sent the value of bitcoin to over $20,000 in 2017 for virtual currencies to upset existing financial systems.
Crypto Assets is a better name
A special line in the report which would no doubt appeal to traders in the crypto space is a proposal by the Financial Stability Board in Russia to adopt the title ‘crypto assets’ in place of cryptocurrencies.
This would be fitting because the digital tokens, simply are ‘financial asset based on the application of cryptography and distributed ledger technology’ according to the report.
On the one hand, a clear list of the risks incurred in global crypto trading had a place in the report. The outlined risks included a lack of protection for investor rights, risks in the field of preventing money laundering and crime financing, lack of market liquidity, operational risks, and the use of leverage by traders.
Attempts to regulate cryptocurrencies in the European nation could also enter into an auto-pilot mode with a new legislation containing the proposal in the State of Duma passing its first reading.
While Russia has never been the biggest player in the growth of virtual currencies in the last decade, the current report will calm fears amongst crypto-opposing nations that we are nearing a global financial crisis. Crypto asset owners can also worry less and buy more crypto.