Central Bank Governor Elvira Nabiullina is determined to keep crypto out of the Russian economy by doubling down on her crackdown on crypto by calling for stricter and harsher penalties for citizens who are caught using crypto for transactions.

Speaking before lawmakers in the State Duma on April 3, Nabiullina emphasized how cryptocurrency is a no-go zone for the Russian economy and how the country still has a long way from creating a framework to limit and regulate the use of crypto in the country.

Doubling down on crypto restrictions

Nabiullina, a staunch crypto skeptic and a key ally of President Vladimir Putin, has long advocated against the integration of cryptocurrencies into Russia's economy.

During her recent address, she proposed a new experiment which would limit the use of cryptocurrencies to only the top echalons of the Russian community, where only individuals who have an annual income of more than 100 million rubles would be allowed to participate in the crypto market. During the speech, Nabiullina said

“Our position is unchanged. We cannot allow crypto to penetrate into domestic monetary circulation or settlements within the country. We propose pursuing investment opportunities while increasing liability for unauthorized crypto use.”

The ELR serves as a controlled environment where select firms can engage in crypto transactions for international trade, but its scope remains limited.

Crackdown on those who flout the law

The Russian lawmakers outlawed the use of cryptocurrencies for payments in 2020 and more recently legalized crypto mining, but the country has yet to establish comprehensive laws governing crypto trading or exchanges. Enforcement of existing restrictions has been minimal, with offenders rarely facing criminal liability. Nabiullina now seeks to change this by introducing harsher penalties for those violating crypto regulations.

She argued that retail investors should be shielded from the risks associated with cryptocurrencies, citing their volatility and lack of accountability.

“Crypto is very volatile. Retail investors do not understand the risks involved with crypto. And it is unclear who is responsible for these coins.”

Despite her firm opposition to widespread crypto adoption, Nabiullina has shown her willingness to make some concessions to accommodate pro-industry forces.

While she has expressed support for allowing "highly qualified investors" to participate in crypto investments , but she stressed that all these transactions still have to abide by the ELR framework. Additionally, she has also revealed that she is also thinking about letting ordinary qualified investors to potentially access crypto derivatives outside the sandbox under strict conditions.

Under the existing proposal, only citizens who have already invested over 100 million rubles in securities and deposits will be allowed to obtain the "super-qualified" investor status required to trade crypto in the sandbox. But the Central bank has recently taken a step back by cutting down the requirements by half by allowing citizens with a yearly income of more than 50 million rubles to join the experiment as well.

Lawmakers divided on crypto regulation

The debate over cryptocurrency regulation continues to divide Russian lawmakers. Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, acknowledged significant interest among MPs in both supporting and opposing crypto initiatives.

Meanwhile, Vyacheslav Volodin, Chairman of the State Duma, urged legislators to accelerate their work on developing comprehensive rules for the sector.

"Let's think about what other rules we could make in this sector. Please don't stop. Continue your work, because its extremely important."

As Russia grapples with its regulatory stance on digital assets, Nabiullina's push for stricter controls reflects her commitment to safeguarding the economy from what she perceives as the destabilizing effects of cryptocurrency.

However, her concessions to pro-crypto forces suggest a recognition that digital assets may play an increasingly significant role in global trade—albeit under tightly regulated conditions.