Rules set for crypto margin collateral and short selling
The Bank of Russia has published a draft ordinance establishing rules for using cryptocurrencies and digital rights as margin collateral and executing short sales. The framework applies to both qualified and non-qualified investors, subject to central bank limits.
Tiered access for leveraged crypto trades
The draft ordinance published by the Bank of Russia for regulatory impact assessment outlines mandatory requirements for brokers and market participants.
Under the proposed framework, both qualified and non-qualified retail investors will be permitted to engage in margin trading and short sales involving cryptocurrencies and digital rights.
However, transactions conducted by non-qualified investors will be restricted by specific limits set directly by the regulator to curb potential losses.
Furthermore, brokers will be required to incorporate these digital assets into their existing risk coverage ratio calculations, expanding the supervisory framework currently applied to traditional assets.
Aligning digital assets with traditional risk metrics
Currently, Russian brokers calculate risk coverage ratios exclusively for transactions involving standard financial instruments such as securities, precious metals, foreign currency, futures, and options.
Adding cryptocurrencies and digital rights to this mandatory list updates the portfolio safety standards.
These ratios define the operational boundaries for client leverage and establish strict threshold triggers for forced position liquidations, aiming to safeguard investors during sharp market movements.
Pragmatic rules with cautious boundaries
Formalizing crypto margin rules acknowledges market reality while attempting to contain retail risk.
Integrating digital assets into standard leverage ratios provides needed risk management parameters.
Yet effectiveness hinges entirely on how strictly the central bank sets transaction limits for non-qualified traders.