CBR does not see tokenization of noncash money in bank accounts needing major legal changes
MOSCOW. Sept 8 (Interfax) - Banks' use of technology to tokenize noncash money will not require significant changes to legislative regulation, as this is essentially just a new form of accounting, the Central Bank of Russia (CBR) said in a report on tokenization of noncash money in bank accounts (TNMB).
However, tokenization of money will probably require adjustments to anti-money laundering regulation, the CBR said.
In the report, the CBR looked at the main trajectories of the international debate over the tokenization of noncash money.
"Since TNMB is just a form of keeping a record of noncash money, it is noted that defining a legal regime for TNMB, if it is deemed advisable, should not require significant changes in regulation," the report said.
The CBR outlines three possible models for tokenizing noncash money, noting that two of them will require legal changes.
Under the first model (Model 1), tokenization can be used internally at banks and is only an organizational model for recording funds in accounts, akin to automated banking systems.
The other models, which the CBR believes could require legal changes, involve tokenizing noncash money based on a unified platform to which lending institutions connect. The organizer of this platform can be a consortium of banks (Model 2) or the regulator (Model 3).
"In general, everything else being equal, the implementation of TNMB based on a unified platform could require more legal changes [than Model 1]," the CBR said.
The CBR also said that, in terms of the stability of lending institutions, when using TNMB banks can be subject to the same statutory ratios and requirements for financial stability and reliability, since this is the same noncash money in banks, just recorded using new technology. However, additional technical requirements for maintaining stable, seamless and uninterrupted payments might be needed, the CBR said.
In addition, "tokenization of money will probably require fine-tuning of regulation in the area of AML/CFT/FPWMD and confidentiality compliance," the CBR said.
