The Russian government is said to have reached an agreement with the central bank on the issue of cryptocurrencies. According to numerous media such as Kommersant and Cnet, the agreement provides for the publication of a draft law by February 18.
Although the bill provides many restrictions on the ownership and circulation of cryptocurrencies – exchanges for example being subject to strict regulation – the document should define cryptocurrencies as a type of “analog currency” and not as an “asset digital finance”.
However, while the international crypto community reacted positively to the news, some caution is warranted.
This development is far from, for example, El Salvador’s decision to adopt Bitcoin (BTC) as legal tender.
Russian lawmakers have been at an impasse on the issue of cryptocurrency regulation for several years, mainly because many forces within the government – notably the Ministry of Finance – favor a softer approach to regulation, while the regulator has repeatedly called for a blanket ban on cryptocurrencies.
This impasse has left the legal system in limbo, with politicians and members of the judiciary unsure how to define crypto. Previous legal documents referred to crypto as a form of “intangible property” and vague terms like “digital assets” and “digital financial assets” were used to define tokens like BTC.
Russian politicians and legal experts agreed that these terms lack clarity and urged the government to approve legally binding definitions for terms such as “blockchain”, “cryptography”, “crypto mining” – as well as “crypto-assets”. “. It therefore seems that calling crypto “analogous to a currency” is more a matter of semantic gymnastics for legal purposes than any desire to adopt crypto.
The cabinet’s agreement with the Central Bank may have been obtained after direct intervention by the president Vladimir Poutine, which earlier this year referred to Russia’s cryptocurrency “resources” (namely a large amount of developers and excess electricity). But Putin’s previous comments on crypto, while somewhat bullish at times, remained cautious.
And the regulatory framework that would have been agreed by the cabinet and the Central Bank might seem eerily familiar to anyone who has studied the path taken by regulators in regions such as Europe and East Asia.
The bill aims to eradicate anonymity in the crypto industry, by requiring exchanges to fully identify their customers and transactions through the national banking system and licensed financial intermediaries.
People looking to buy or sell cryptocurrency will be required to “disclose their full name, phone number, passport details, as well as bank account details and email address” to banks, media reported.
If passed, the bill will also seek to criminalize undeclared cryptocurrency transactions over $8,000 and impose punitive fines on any business or individual who accepts cryptocurrency as a form of payment.
Crypto payments have been outlawed in what remains the only piece of Russian crypto law to date, but the courts have been powerless to impose any strict form of punishment on anyone caught violating this law.
These measures would require all exchanges and brokers to register with a central body – and would force all foreign-based platforms to obtain operating licenses or close their activities in Russia.
The central body in question would be composed of representatives of six regulatory bodies, including two ministries, the central bank, the attorney general’s office and the federal tax service.
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