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This week, a senior official in Russia said that the country needed stronger laws to protect novice Russian crypto investors from financial losses, and announced that the country was looking to potentially unveil legislation limiting retail investors' ability to make risky crypto purchases.

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“We certainly need to provide specific legislation to protect a non-professional investor from ill-considered investments in digital currencies,” said Anatoly Aksakov, chairman of the Russian State Duma Committee on Financial Markets, at a conference on the protection of consumer rights. He said that Russia’s parliament was mulling new legislation to restrict cryptocurrency purchases and investments among retail investors.

“Digital currencies are subject to our enhanced focus, and we will look to provide maximum protection for our citizens who invest in digital assets, because it is a new instrument, and it is quite difficult for an unskilled investor,” he said.

Cryptocurrencies have risen in popularity in Russia among investors. More than 75% of Russia’s investors view cryptocurrencies like Bitcoin, Ether, and Litecoin as the top “forward-looking” investment in their portfolio, preferring it to gold, according to Russia’s Association of Forex Dealers.

Aksakov pointed out that cryptocurrencies have generated new financial opportunities and profits for investors, along with increased risks.

In July, the Central Bank of the Russian Federation cautioned Russian exchanges not to allow securities related to cryptocurrencies and crypto-assets, citing high volatility, low liquidity, and non-transparent pricing, among other risks.

This echoes a September statement from Sergey Shvetsov, the first deputy governor of the Bank of Russia, who said that such restrictions would blunt the impact of financial losses if the crypto market “collapses to zero.” To that end, the Bank of Russia is looking to curb “emotional” cryptocurrency transactions by retail investors. 

This summer, an official at the Bank of Russia, Elvira Nabiullina, described crypto as the most dangerous investment tool.