Russia is making significant strides towards embracing decentralized financial organizations, commonly known as DAOs, to stimulate liquidity within its Digital Financial Assets (DFA) market. The Director of the Department of Financial Policy at the Ministry of Finance, Ivan Chebeskov, disclosed these intentions during the Crypto Summit 2023.
In the face of international sanctions affecting Russia, the nation is shifting its focus towards legitimizing a novel decentralized financial paradigm, the DAO, with the goal of injecting vitality into the financial markets while adhering to decentralized principles.
Russia’s DeFi DAO Initiative to Bridge the Gap Between Digital Assets and Decentralized Finance
A DeFi DAO, or Decentralized Autonomous Organization, leverages blockchain technology and smart contracts to oversee various financial transactions in a decentralized manner. DeFi DAOs are poised to revitalize the Russian markets, encompassing activities like lending, trading, asset storage, staking, and more.
This strategic move by the Russian government aims to bolster liquidity in the DFA market, which has been under pressure due to recent sanctions. Speaking at the summit, Chebeskov emphasized the need for synergy between DFAs and the decentralized financial world, stating that the country is actively advocating for the development of DFAs, yet understands that DFAs alone will not ‘take off’. They need a connection between DFAs and the decentralized world of finance to utilize the existing liquidity in decentralized finance.
Russia’s Challenging Journey to Attracting Investors
Since the signing of the DFA bill into law by President Vladimir Putin in 2020, the country has encountered challenges in attracting investors. Chebeskov highlighted that currently, only 10 platforms have been registered through the Bank of Russia.
Despite the hurdles, there is optimism that the DFA market will gain momentum, and the potential legalization of DeFi DAOs could expedite this process. The Director expressed the country’s understanding that “in order for both DFAs and decentralized finance in general to develop more actively, the DAO needs to be legalized.”
Unlike in some countries where DAOs may require new definitions before legalization, Chebeskov noted that Russia does not face such obstacles. He anticipates that following legalization, DeFi DAOs will thrive in the the country’s landscape, further fueling the nation’s financial evolution.