Ether holds as Bank of Russia eyes public‑chain DFAs

Bank of Russia to allow DFAs on open networks like Ethereum

Russia’s central bank plans to allow digital financial assets to circulate on open public networks such as Ethereum to attract foreign investment, according to the Bank of Russia. The move would expand today’s permissioned infrastructure by enabling compliant assets to live directly on widely used chains.

Under the current approach, tokens are typically issued on domestic private platforms and then moved to open networks, a process market participants have not widely adopted. Direct issuance could lower operational friction and cyber risk while improving reach, according to Kirill Pronin, head of the financial market infrastructure department. That would also streamline how issuers and banks engage foreign counterparties on-chain.

Why this matters: digital financial assets (DFAs) and foreign investment

Open networks can broaden access for institutional investors and reduce integration costs for cross-border transactions. Clear rules and connectivity to international rails are pivotal to investor confidence, according to Yakov & Partners.

Domestic restrictions remain even as cross-border functions expand for DFAs. “Using cryptocurrencies for internal settlements remains prohibited,” said Herman Gref, CEO of Sberbank. He has also engaged with the monetary authority on stablecoin functionality for transactional use cases.

Issuers may gain a larger audience and improved secondary liquidity by minting directly on chains like Ethereum, subject to regulatory controls. Banks would still need robust controls for client onboarding, wallet management, and transaction screening on public rails.

For foreign investors, on-chain access could simplify participation in Russian DFA offerings, but sanctions and counterparty risks remain decisive. Harvard’s Davis Center has analyzed Russia’s token initiatives as tools for sanctions-resilient payments, underscoring the need for stringent sanctions checks and compliance triage.

International settlement pilots could broaden as policy evolves. Finance Minister Anton Siluanov views DFAs as speeding up processes and lowering costs in cross-border settlements, according to Intellinews.

Compliance, custody, and risk controls for DFAs on public blockchains

Domestic restrictions versus cross-border use of digital financial assets

Domestic crypto payments remain restricted under current rules. Policymakers are prioritizing export and cross-border settlement functions for DFAs rather than internal retail payments. Overseas placement of Russian-issued tokens has also been supported, as noted by Anatoly Aksakov, chairman of the State Duma Financial Markets Committee.

KYC/AML, whitelisting, custody, and sanctions-exposure considerations

Public-chain circulation heightens the need for strict KYC/AML, address whitelisting, and continuous on-chain screening. Custody must handle smart-contract risk, key management, and segregation. Sanctions screening and counterparty due diligence are central for cross-border flows. Institutional guardrails will likely differentiate qualified from retail access as the framework matures.

FAQ about Bank of Russia

How would direct issuance on open networks differ from the current private-platform model in Russia?

Issuers would mint DFAs directly on Ethereum instead of issuing on private domestic platforms and transferring later, potentially reducing operational and cyber risks while improving foreign accessibility.

When could these changes take effect, and what approvals or laws are still required?

Timing is not finalized. Implementation likely depends on regulatory approvals and any necessary legal changes, while current prohibitions on domestic crypto settlements are expected to remain in force.