Russia is taking steps to legalize and regulate decentralized financial organizations, also known as DAOs, in order to boost liquidity in the local Digital Financial Assets (DFA) market. Ivan Chebeskov, the Director of the Department of Financial Policy of the Ministry of Finance, made the announcement at the Crypto Summit 2023. The move is seen as a way to inject excitement into the markets while adhering to the principles of decentralization.
A DeFi DAO is a Decentralized Autonomous Organization that uses blockchain technology and smart contracts to facilitate financial transactions in a highly decentralized manner. By legalizing DeFi DAOs, Russia hopes to bring more liquidity to the market, especially in light of recent sanctions. Chebeskov highlighted the need for a connection between DFAs and the decentralized world of finance to leverage existing liquidity in decentralized finance. Since the DFAs bill was passed into law in 2020, Russia has been struggling to attract investors, with only 10 platforms registered through the Bank of Russia. The possible legalization of DeFi DAOs could accelerate the development of the DFA market.
In recent years, Russia has faced sanctions from major economies due to the invasion of Ukraine. In response, the country and its investors have been finding inventive ways to evade sanctions. Reports have suggested that cryptocurrency could be used by local investors to bypass sanctions. There have also been rumors of Russia legalizing crypto specifically for international trade. As Russia prepares to legalize decentralized financial organizations, it remains to be seen how it will impact the country’s market and its ability to navigate international sanctions.
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