Russia Gears Up For Upcoming Crypto Bill

Document To Come Out For Public Soon

At the time of writing, the bill's draft had not been made public. The authority aims to make the paper public in the next three weeks, according to a ministry official. 'There are various steps to the public discussion procedure. The official stated, "We are currently in the basic stage of informing about the beginning of development.' According to reports, Russian Finance Minister Anton Siluanov expects the crypto bill to pass by the end of 2022.

According to local media, the Russian government plans to introduce federal crypto legislation by Friday, to eventually reach an agreement on crypto regulation with Russia's central bank. The Finance Ministry earlier proposed regulating the crypto market by limiting non-professional investors' crypto exposure and putting the crypto infrastructure under the control of a single 'digital currency exchange organizer.'

Siluanov stated that his government advocated identifying crypto dealers to distinguish between the 'white' and 'grey' markets. Giving law enforcement the ability to track money movements and transactions could jeopardize one of the main selling features of cryptocurrencies, said anonymity. David Henderson, senior associate at Browne Jacobson

"The Russian government...appears to have taken the position that crypto-assets are here to stay and is contemplating legislation to bring the industry 'out of the shadows and creating an opportunity for legal business."

The yearly amount of cryptocurrency transactions in Russia is estimated to be around $5 billion, according to the central bank. Andrey Kladov, a former cryptocurrency expert at Russia's Internet Initiatives Development Fund who now works in digital banking in South Africa, believes their divergent perspectives would stifle market development, making the grey market greyer.

Regulator Insists on Imposing Fines of up to 1M rubles for Violations of Restrictions

The CBR has proposed a ban on a wide range of coin operations, including issuance, trading, and mining, while Minfin has campaigned for legalization under rigorous controls. Based on the Treasury's concept, the federal government authorized a plan to control the crypto area.

Meanwhile, according to media reports, the Bank of Russia has produced its legislative proposals aimed at prohibiting the issuance, distribution, and use of 'private digital money' in Russian Federation payments. According to RIA Novosti, the regulator wants to punish violators up to 1 million rubles ($13,000) for breaking the rules.

According to Tass, which claims to hold the documents, the central bank's draught laws have been submitted to the finance ministry, according to a source in the financial industry. The monetary authority states in an explanatory note that sanctions should be imposed on businesses and persons participating in unlawful operations.

The regulator also seeks to prohibit the spread of knowledge about this type of currency, as well as any of the other actions specified. Banks, other financial institutions, and companies operating inside Russia's national payment system should be forbidden from holding cryptocurrencies under pain of administrative action, according to the CBR, while crypto-related transfers on behalf of individuals should be disallowed.

A Regulation or a Prohibition?

The Bank of Russia's recommendations reflects the bank's stance on cryptocurrencies, which has isolated it among Russian government institutions that prefer regulation over prohibition. They come on the heels of the trial phase of its own central bank digital currency (CBDC) project. The CBR announced this week that it had completed the first transactions between digital ruble wallets with the assistance of commercial banks that took part in the trials, which were completed in December.

Cryptocurrency prohibition is as impossible in Russia as internet prohibition, according to Siluanov, who spoke at the ministry's briefing with the central bank last Wednesday. Rather than outright prohibiting it, Siluanov proposed regulating the already-existing digital token industry so that the government can monitor it while also allowing it to contribute to the country's capital growth. Russia stands to benefit greatly from crypto taxes based on realized gains on the amount of deposited and withdrawn fiat assets. According to a government document, analysts predict that the country will collect more than $13 billion in tax payments from the crypto market.