Russian Finance Ministry Flags Risks in DeFi Development

The Russian Finance Ministry is watching the development of the decentralised finance (DeFi) sector with concern, as it is associated with significant risks due to the lack of proper regulatory oversight. This was stated by Deputy Finance Minister Alexey Moiseev to Interfax.

“It is clear that this trend is gaining momentum and intensifying globally. The danger lies in the complete absence of regulatory oversight over DeFi activities, so this is, in my view, alarming,” he said.

According to him, the two main DeFi-related risks are the potential violations of anti-money laundering and counter-terrorist financing requirements, and consumer protection in financial services.

“Thirdly, the Bank of Russia, through macroprudential measures, is currently regulating the financial sector with a view to controlling the possible emergence of bubbles and the like, and the emergence of DeFi deprives it of those levers entirely,” he said.

The official noted that the DeFi sector requires separate study due to the risks associated with it, while overall the Ministry’s stance on crypto assets remains relatively liberal:

“All that we proposed in our concept is to buy cryptocurrency within the existing decentralised system, but this does not move us toward legitimising DeFi.”

For now, the ministry does not understand how to regulate the sector, Moiseev emphasised.

The official also noted that authorities are actively discussing the regulation of the crypto market. He expects a decision within a month.

“The main touchpoint is that both we and the Bank of Russia are against settlements in cryptocurrencies. It is not yet clear how we will align our positions, but we do not want to rule out a compromise option in the future. I think that as we work, some compromise will be found,” he said.

As reported, the Bank of Russia and the Ministry of Finance hold divergent positions on cryptocurrency regulation. The Bank of Russia to ban their circulation and mining on the territory of the Russian Federation, while the Ministry of Finance advocates regulating the industry. The agency has already prepared its own concept. President Vladimir Putin urged the government and the Bank of Russia to come to a unified view on regulating the crypto industry.

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