Russia’s Path to Legalizing Decentralized Financial Organizations: A Game-Changer in the Making

Russia Working on Legalizing and Regulating Decentralized Financial Organizations

Bringing Liquidity to the Digital Financial Assets (DFA) Market

Russia is actively exploring ways to legalize and regulate decentralized financial organizations, also known as DAOs, in order to increase liquidity in the local DFA market. Ivan Chebeskov, the Director of the Department of Financial Policy at the Ministry of Finance, discussed this initiative at the recent Crypto Summit 2023.

According to Chebeskov, amid the impact of internationally imposed sanctions on Russia, the country is shifting its focus towards legalizing DAOs as a new form of decentralized finance. This move aims to inject excitement into the markets while adhering to the principles of decentralization.

A DeFi DAO, or Decentralized Autonomous Organization, leverages blockchain technology and smart contracts to manage various financial transactions in a decentralized manner. By legalizing DeFi DAOs, Russia hopes to breathe life into its markets, allowing activities like lending, exchanging, storing digital assets, staking, and more to flourish.

Chebeskov highlighted the importance of connecting DFAs with decentralized finance, stating, “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.

Since the DFAs bill was signed into law by Russian President Vladimir Putin in 2020, the country has faced challenges in attracting investors. Currently, only 10 platforms have been registered via the Bank of Russia. However, there is hope that the DFA market will gain momentum, especially if DeFi DAOs are legalized.

Chebeskov emphasized that Russia recognizes the need to legalize DAOs in order to actively develop both DFAs and decentralized finance. Unlike in other countries where new definitions may be required for DAO legalization, Chebeskov believes that Russia does not have such a need. He hopes that once legalized, the DAOs will thrive in the country.

Russia’s Innovative Approach Amid Sanctions

Utilizing Cryptocurrency to Evade Sanctions

Following the chaotic Russian invasion of Ukraine, Russia has faced sanctions from major economies, led by the US. However, the nation and its investors have shown inventiveness in evading these sanctions.

Reports from last year suggested that local investors were using cryptocurrency as a means to avoid sanctions. Furthermore, in 2022, rumors circulated about Russia considering the legalization of crypto specifically for international trade.

Source: Interfax