The Russian government is moving forward with the regulation of cryptocurrencies. Through a document published on the official website of the Ministry of Finance, the government determined some bases for the draft law that will be discussed in February.
In the document entitled “Concept of legislative regulation of mechanisms for organizing the circulation of digital currencies”, the Russian government assured that citizens hold more than 12 million accounts and around 2 trillion roubles in cryptocurrencies. At the same time, it claims that the country ranks third in the world in Bitcoin mining.
With such a large volume in cryptocurrencies, the central bank warned about the risks in crimes related to money laundering or scams. The document was approved after a meeting with Deputy Prime Minister, White House Chief of Staff Dmitry Grigorenko.
Some of the regulations suggested in the document are:
- To gain access to the cryptocurrency, the user will have to go through identification through the banking system. An alternative would be to work through an authorized intermediary.
- Russian members of the crypto community will be offered to conduct cryptocurrency transactions through banks.
- All information on cryptocurrency transactions must pass through Rosfinmonitoring’s state-run Transparent Blockchain system. According to the document, Transparent Blockchain can help identify owners of cryptocurrency wallets using open source data, as well as information from the dark web, create patterns of illegal cryptocurrency use and serve as a registry of addresses related to crime and terrorist financing.
- Cryptocurrency users will be divided into qualified and unqualified investors.
- Market participants will be required to declare transactions with cryptocurrencies in the amount of more than 600 thousand roubles. Regulators will consider failure to declare as a criminal offense.
- Fines will be provided for illegal acceptance of cryptocurrency payment.
- Foreign cryptocurrency exchanges will be able to continue working on the territory of the Russian Federation. To do so, they will have to open a representative office in the country.
- The Central Bank, the Ministry of Finance, Rosfinmonitoring, the Federal Tax Service, the Ministry of Digital Finance and the Prosecutor General’s Office will supervise the digital asset market in the Russian Federation.
It is important to remember that digital assets received legal status in Russia on 1 January 2021. At the same time, Russians were legally prohibited from using cryptocurrencies as an alternative to the rouble.
The “Concept of Legislative Regulation of Mechanisms for Organizing the Rotation of Digital Currencies” does not reflect the details of mining regulation on the territory of the Russian Federation, even though in 2021 Russia became the world’s third largest center for cryptocurrency mining. The decision to entrust the preparation of a draft law on the circulation of a new financial instrument in the Russian Federation to the Bank of Russia also seems strange, as the financial body is opposed to the legalization of a new financial instrument.
The Bank of Russia sees a number of threats in cryptocurrencies. In particular, the Central Bank believes that cryptocurrencies pose a danger to the financial stability of the Russian Federation. Despite the Central Bank’s fears, Russian regulators decided to go down the path of legalization of cryptocurrencies. Finally, it is not specified how the transition period from the current cryptocurrency regulation regime to the new one will be.
