- The Central Bank raises objections
- The requirements of the future law
- Is there a future for crypto in Russia after this law is adopted?
The Russian Ministry of Finance has acted upon its intention of initiating crypto regulation and has submitted a bill to the government. According to a statement released on Monday, the cryptocurrency bill in Russia was introduced on February 18 and is based upon the previously coordinated roadmap that was prepared by various government agencies, including top-tier law-enforcement authorities.
There is a disagreement between the Ministry of Finance and the Central Bank. The latter feels strongly about regulation and claims that it would be better to ban crypto trading and mining activities altogether. The Central Bank has previously talked about launching its own cryptocurrency, the digital ruble, and now suggests imposing penalties on those who participate in cryptocurrency trading and issuance. According to the Tass agency, the Central Bank suggests imposing fines in the amount of up to half a million rubles ($6,360) for individuals and twice as much for companies.
In its statement, the Ministry of Finance claims that the concerns of the Central Bank “will be considered in the further work on this bill where they don’t contradict the Ministry of Finance approach”.
The full text of the suggested crypto bill has not yet been added to the open database of legislation.
According to the bill, cryptocurrencies are an investment tool but not a legal tender. Therefore, the bill does not permit using crypto as payment for goods or services. It also contains requirements for crypto exchanges and OTC trading desks. In order to be included in a government register, they need to comply with specific criteria. Foreign cryptocurrency exchanges that would like to operate in Russia must register legal entities in the country.
According to the press release, all crypto-to-fiat transactions should be conducted via bank accounts. Users also have to implement KYC checks with banks and crypto exchanges.
Crypto exchanges will need to notify their users of the potential risks of crypto investments. New investors will have to demonstrate their knowledge of crypto and related risks by passing special online tests. If an investor has passed the test, they can invest up to 600,000 rubles a year; everyone else will be limited to 50,000 rubles. The limits will not apply to qualified investors though.
Exchanges will have to keep their own funds and those of their users in separate accounts and also keep records of all crypto addresses of their users. Investors will not be exposed to liability for debts of their exchanges.
The proposed bill will also regulate mining. According to the press release, all mining operations will be monitored by specialized government bodies. Further details will be provided later.
The bill’s requirements are almost identical to those of regulations in Western countries, however, the online tests for investors suggest that there might be some additional standards for exchange and crypto platforms.
It is obvious that the government is getting more and more eager to control the new financial market. However, it is not clear whether the technical and legislative instruments have been thoroughly considered and elaborated. And without such instruments, a bill is only a sequence of ambitious statements.