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Russia’s War Fears Impact Cryptocurrency And Futures Contracts As Stock Market Falls 13%

The Russian stock market fell on Monday as war fears spurred a massive sell-off, wiping out the value of some of the country’s most valued enterprises by tens of billions of dollars.

On Monday, U.S. stock index futures fell as Russian President Vladimir Putin recognised two rebel areas in eastern Ukraine, stoking worries of a major confrontation.

The Moex index fell 6.5 percent, increasing its losses over the last four trading sessions to around 13.21 percent. The dollar-dominated RTS index fell 7.3 percent to its lowest level since late 2020. Since the Russian military buildup on Ukraine’s borders began in October, the RTS market has lost more than a fifth of its value.

Putin emphasized Ukraine as an important part of Russian history, with eastern Ukraine having old Russian land, and he voiced confidence in his decision’s support from the Russian people. Putin has directed the Russian army to conduct “peacekeeping” operations in the region.

Futures on the S&P dropped by 0.7%, while Nasdaq futures fell by over 1%. The CAC40 in France plummeted 2.07%, German Dax by 1.94%, the Euro Stoxx 50 index by 2.13 percent. The losses in the UK’s FYSE100 were limited to 0.4%, and the IBEX35 index in Spain declined 0.7%.

“While the US continues to try to interact with Russia, there is no sign of a cooling off, and there has been no update on the anticipated meeting,” Siddhartha Khemka said.

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While Russian officials attempted to reassure investors that the stock market’s wild fall had “no economic basis,” global confidence in the country’s weak banking system is fading. There are fears that the US may cut off Russian businesses’ access to money. However, the west and parliamentarians are particularly concerned about Russia’s economic future.

Anders Aslund, an Atlantic Council senior fellow and chair of the Center for Social and Economic Research’s International Advisory Council, cautioned on Friday that Russian assets could fall considerably worse.

A draught law on cryptocurrency regulation was recently submitted after weeks of debate between the Bank of Russia and the Ministry of Finance. The Bank of Russia suggested a blanket ban on cryptocurrency mining and trading last month.

The digital currency bill will establish a licensing structure for platforms that facilitate the exchange of digital assets, as well as prudential, risk management, data privacy, and reporting standards for these operators. Buying and selling cryptocurrency would be restricted to bank accounts, and both crypto platforms and banks would be compelled to use Know Your Client protocols.

It proposes a new exam to assess a prospective investor’s understanding of cryptocurrencies and their inherent hazards. Those who pass the exams would be able to spend “up to 600 thousand rubles” every year in cryptocurrencies. Those who fail will have their digital coin investments limited to “50 thousand rubles”.