Compliance Corner: DIFC, Societe Generale, Sberbank, Russia

Editorial Staff

21 March 2022

DIFC
has been included in the list of information system operators issuing digital financial assets, it announced last week.

The move, coming at a time when Russia has been hit by sanctions and kicked out of the SWIFT banking network following the country’s invasion of Ukraine, once again puts cryptocurrencies in the limelight. Ironically, Bank of Russia, the central bank, has warned of what it says are the risks of such entities. It said “growth of cryptocurrencies seriously jeopardises Russians’ wellbeing and the stability of the financial system and causes threats associated with the use of cryptocurrencies for illicit settlements.” The consultation paper was entitled Cryptocurrencies: Trends, Risks, and Regulation.

In its statement last Thursday, Sberbank, the country’s largest bank, said digital financial assets on its platform “will be recorded and circulated via an information system based on distributed ledger technology, which ensures data security and makes data immutable.”

Companies will be able to issue their own DFAs to prove the validity of the cash requirements, which will enable them to attract market investments; acquire DFAs issued through the Sber information system, and make other DFA transactions in accordance with Russian laws.

The statement suggests that cryptos may in some ways become alternative financial channels in Russia as it copes with attempts by the US, UK, the European Union and others to isolate it from the global financial system.