Bank of Russia Moves to Allow Margin Crypto Trading for Retail and Professional Investors

The Bank of Russia is preparing to open the door to margin trading in cryptocurrencies for both professional and nonprofessional investors once it signs off on the relevant rules. Under the draft, brokers would also be allowed to accept digital assets as collateral for leveraged trades. Retail participants would face limits set by the regulator; the draft does not specify the exact thresholds. To gain access, investors would have to pass a test. In addition, nonqualified market participants would be subject to an annual cap on leveraged purchases of digital currencies: no more than 300,000 rubles through a single intermediary. Margin trading allows investors to trade using not only their own funds but also money borrowed from a broker. The mechanism amplifies outcomes: gains are larger if prices move in the investor's favor, while losses increase if prices fall. A broker would be able to take digital currencies and digital rights as collateral for margin transactions only if two conditions are met: the asset must be approved for trading on a Russian exchange, and the clearing organization must assign a risk rate, expressed as a percentage reflecting the asset's susceptibility to sharp price swings. The central bank plans to add digital assets to the list of liquid collateral eligible for such use. The draft also sets rules for forced liquidation. A broker may close a margin position only via non-addressed orders; other approaches would be allowed only when address identifiers are not used in transactions. Digital currencies and central bank rights would remain subject to existing risk coverage standards NPR1 and NPR2. NPR1 measures the difference between portfolio value and initial margin, while NPR2 measures the difference between portfolio value and minimum margin. If both indicators fall below zero, a margin call is triggered and the broker must forcibly close the client's positions to limit losses. The regulator further outlined when different crypto assets or digital rights can be treated as "identical" for risk calculations. Cryptocurrencies are considered homogeneous if they are interchangeable and operate within the same information system, including via a single smart contract. Digital rights are considered homogeneous if they come from the same issuance and circulate within the same system. Separately, the Bank of Russia has recently set requirements for digital custodians, which are expected to enter the Russian market starting in September to provide accounting for crypto assets and digital rights.