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Russia’s new draft bill treats crypto as an investment tool and not a legal tender

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After much deliberations, Russia’s regulation of crypto seems to be taking its final shape. According to a translated press release published on Monday, the bill that was introduced in parliament on Feb. 18. by the Ministry of Finance was part of its plan to regulate cryptocurrencies in the country.

The announcement comes amidst tough opposition mounted by Russia’s central bank, which advocates an absolute ban on cryptocurrency trading and mining. The latter cited the threat posed by digital assets to financial stability. The clash intensified after the finance ministry disagreed with the bank’s views prompting President Vladimir Putin to call for establishing consensus on the issue.

Following that the Ministry of Finance in the press release said the concerns raised by the Bank of Russia “will be considered in the further work on this bill where they don’t contradict the Ministry’s approach.”

The bill as per the P.R treats crypto solely as an investment vehicle. Its usage as means of payment on its territory continues to be prohibited. It also specifies requirements for cryptocurrency exchanges and over-the-counter desks, to meet certain standards in order to obtain a license and would be controlled by an authorized body determined by the Government.

Additionally, foreign crypto exchanges must register in Russia to provide services in the country. that being said, the official text of the bill is yet to be available in the online database for legislative documents.

Tussle between Russia’s ministries and Central Bank

A few days ago, Finance Minister Anton Siluanov told state TV channel Rossiya-24 that he hoped disagreements could be resolved amicably and a bill regulating cryptocurrencies might be passed by the end of the year. He said the government would take the final decision on the same.

Siluanov also revealed his ministry has proposed to identify crypto traders, which he said would segregate the “white” market from the “grey” market. This will empower law enforcement agencies to effectively trace money flows and transactions.

Voicing similar sentiment Andrey Kladov, a former cryptocurrency expert at Russia‘s Internet Initiatives Development Fund expressed concern that the growing clash between the two parties on crypto regulation could significantly hamper market development, and warned that it might instead encourage “the grey market to become even greyer.”

Crypto operations opposed by the Bank of Russia

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According to the Russian legislation, it is not prohibited for individuals or legal entities to buy cryptocurrencies in foreign markets, but it is prohibited to issue them on domestic platforms and use them as means of payment within the Russian Federation.

In an interview on Friday the 17 December 2021, by the local media house finmarket.ru, the Governor of the Bank of Russia, Elvira Nabiullina enlarged the fear around the future of digital assets regulation in the country.

“You know our attitude towards cryptocurrencies, to put it mildly, skeptical, connected with the fact that these are big risks for retail investors, the volatility of this asset is very large. Cryptocurrencies are often used for illegal operations of a criminal nature, they are not transparent, so we cannot welcome investments in such kind of assets. And we advocate that the Russian financial infrastructure is not used for transactions with cryptocurrency, it is quite possible to implement it”

Central Bank of Russia sees high risks in development of the Cryptocurrency market

The bank of Russia has repeatedly articulated that it is looking at the purchasing of blockchain technology-based assets by individuals with a lot of apprehensions. The fact that Nabiullina’s statement came exactly a day after there were reports about the absolute ban on the exchanges of these virtual assets in Russia increases speculations about the fate of the virtual coin market.

In proportionate views, the most rigorous degrees against digital currency were enforced by China, which in September prohibited foreign exchanges from providing services for buying digital assets in the country and also banned miners from working in the country. At the same time, plenty of European countries and the United States of America are slowly removing constraints on the use of cryptocurrencies as a financial means of payment. In particular, in Sweden, the use of cryptocurrency is allowed by the authorities, while its purchase is considered as a transaction with assets, and anti-money laundering laws are observed.

Russia’s Prominent Bank Partners With JP Morgan To Roll Out A Cryptocurrency

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Albeit the government of Russia making efforts to probe the launch of a CBDC, banks in the country have also seemed to have expressed their keen interest in digital assets. One of Russia’s largest state-owned banks revealed its enthusiasm towards rolling out its native digital asset along with a platform that aids in the trading of similar assets. A recent report by Reuters shed light on the launch of this project.

Russia’s Sberbank To Roll Out A Crypto Trading Platform

Cryptocurrencies have been subject to an immense backlash in the past. The assets have been publicly denounced by several authorities across the globe. However, they seem to have recognized the value and prospects of cryptocurrencies. Russia seems to be upping its crypto game. The country’s largest lender, Sberbank revealed that it was soon going roll out a crypto trading platform along with a cryptocurrency, Sbercoin. This project is reportedly the bank’s collaboration with JPMorgan.

The CEO of Sberbank, German Gref suggested that the bank would roll out the Sbercoin sometime next year. Back in July, the Russian government put forth a new law that allowed the trading of crypto, however, prohibited its citizens from employing digital assets as a payment method. Speaking to the RBC, a Russian news portal about that same, Gref said,

“From January 1, the law comes into force, we want to bring to the market our new blockchain platform, which will provide services for the purchase of digital financial assets.”

In other news, the officials at the Russian central bank, Bank of Russia recently revealed that they were against the launch of private stablecoins backed by the Russian ruble. As reported by Russia’s news agency, Prime, the authorities reportedly suggested that developers were allowed to use the central bank’s digital ruble and nothing else. The bank intends to ban private platforms from issuing stablecoins pegged to the country’s official currency.

Russia’s latest move led to several drawing similarities between the former’s and China’s move. China had also issued a blanket ban on stablecoins backed by the yuan. Speaking about the same, the deputy chairman of the Bank of Russia, Sergei Shvetsov said,

“I think that we are not far from this. At least, everything that will be used as a means of payment will be suppressed by us. We proceed from the assumption that the Russian Federation’s means of payment is the ruble.”

Russia’s Digital Ruble May See The Light Of Day By The End Of 2021

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With China on the last page of CBDC ‘s development, several countries have been alerted that the largest populous country is heading towards global financial dominance. Fearing this, certain countries have stepped up the game. Russia is the latest to jump on the CBDC bandwagon.

‘Digital Ruble Is The Future’

In the recent virtual forum, Blockchain Life 2020, members of the Russian parliament as well as the Central Bank’s National Banking Council, Anatoly Aksakov revealed that Russia was keen on developing a central bank digital currency. Aksakov suggested that the digital ruble would be steering towards the testing phase possibly by the next year. He pointed out that consultations regarding the Russian CBDC were carrying on in full swing.

He added,

“I always believed that a digital ruble is the future of all our money circulation.”

The digital ruble would be able to execute several functions of money that would allow it to act as a means of payment, a measure of value as well as a store of value. The Central Bank of Russian further pointed out that a single digital ruble would always equal one cash ruble. The digital ruble would have several functions to carry out, including the tracking of payments and tracking of goods throughout the supply chains.

Several Russian media outlets proposed that the digital ruble would be out and about by the end of next year.

Russian Officials Positive About Blockchain; Skeptical About Crypto

While Russian law has been lenient with crypto assets, it restricts individuals from using it as a means of payment. Almost every country follows the same protocol. Crypto has been outrightly denounced while blockchain technology is shown in a positive light. Russia seems to be doing the same as Aksakov pointed out that blockchain tech was the technology of the future.

However, he highlighted that the pertinent opposition to crypto was garnered from the perils it feigns for the average Joe as well as financial institutions. However, the government is reportedly steering towards incorporating new laws for the better amendment of the crypto-verse. These laws would be put into practice as early as 1 January 2021.

Digital Mortgage Platform Under Development by Bank of Russia

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The Bank of Russia is reportedly creating a digital mortgage network based on a locally built blockchain platform dubbed Masterchain, as per state-owned media outlet Ria on May 28. According to the first Deputy Governor of the Bank, the blockchain platform has recently begun to support mortgages, which is the cornerstone of the impending platform.

The Russian Central Bank has already sent its proposal for a Digital Mortgage Platform to the Government of Russia and the Federal Service for State Registration, Cadastre, and Cartography (Rosreestr).

In fact, the domestic blockchain platform is the first to be validated by the Federal Security Service or the FSB. Previous reports say that the platform is an approved Ethereum-based blockchain platform built back in 2017 by the FinTech Association, which is under the jurisdiction of the Bank of Russia.

Furthermore, this is not the first time that the country’s blockchain platform has been used for the digital mortgage platform. Approximately two years ago, a Russian-based subsidiary of Raiffeisen Bank International reportedly provided mortgage documents with information on the parties concerned, the amount and duration of the mortgage, the property involved in the Masterchain Decentralized Depositary System (DDS).

Digital mortgage platform signals  Russia is blockchain-friendly

Although the country’s central bank has blockchain-based ambitions, the Russian government has been maleficent towards digital currencies. In fact, the Russian legislature recently proposed a fine of up to 2 million rubles ($27,800); and up to seven years imprisonment for the trading of cryptocurrencies. 

Moreover, Russia’s Sberbank recently purchased 5,000 blockchain-based touchless ATMs. This is another signal that the country is a massive supporter of blockchain technology; although it is opposed to the idea of digital currencies.

Meanwhile, the Duma is getting ready for a bill on Russia’s first cryptocurrency regulation bill. The draft has been pending until last week until a second draft was rolled-out on top of other laws. 

Russia’s Anti-Crypto Law May Imminently Shut Down Digital Economy in The Nation

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The digital asset industry at large might have reached an unceremonious dead-end in Russia.

Based on newly drafted bills, the purchase of Bitcoin or any other cryptocurrencies with cash is set to be criminalized as the Russian parliament may enact a law that would make the usage of digital assets illegal in the country.

According to a Russian news outlet RBC, the State Duma proposed multiple numbers of bills that were associated with the circulation and issuance of cryptocurrency. The documents were published on the Telegram channel named “OrderCom” where its authenticity was confirmed.

However, Anatoly Aksakov, head of the Duma Committee on the financial market indicated that the version of the bill drafted was not set in stones at the moment.

It was suggested that the first bill in place would regulate the digital assets in Russia which indirectly meant that the issuance of crypto assets will be prohibited in the nation. Organizations and Institutions will not be allowed to accept digital asset payments or entertain any form of crypto transactions.

The 2nd drafted bill would introduce the criminal code associated with illegal operations with cryptocurrencies. RBC’s report stated that administrative responsibility would sanction fines against individuals for organizing the illegal trading of crypto assets. The amount of sanctions has been highlighted below:

  1. For individuals – from 50 thousand to 500 thousand rubles; ($700 to $7000)
  2. For legal entities – from 200 thousand to 2 million rubles .; ($2800 to $28000)
  3. For officials – from 100 thousand to 1 million rubles. or disqualification for a period of six months to one year; ($1400 t0 $14000)

Legalization of the bill would end innovation in Economy

A country that was recognized as a ‘pro-crypto nation’ before was changing its stance and a part of the community involvement in the crypto space in Russia was getting increasingly tense.

Dr Dmitry Galushko, Director General of OrderCom LLC, PhD indicated that young computer scientist and software developers that were already involved in the space face a terminated of their regular work and the adoption of the bill may inadvertently put a stop to the development of an innovative economy.

Galushko stated,

“If the Russian Federation plans to create a digital economy, then a completely different approach is needed – not to ban, but to provide an opportunity to develop innovative ideas and projects, technologies.”

Now, a glimmer of hope still remains considering the bill is not enacted yet but if the law is passed, the crypto-currency landscape might get widely affect in the European region as Russia’s absence might influence other nations to take similar steps as well.

Russia Confirms Completion of Cryptocurrency Bill; Adoption Delayed Due to Coronavirus

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As the presence of blockchain technology and cryptocurrencies has increased, so has the rate of adoption across countries. Some regions have wholeheartedly accepted crypto while others are still on the fence about its use in mainstream life.

Russia has recently taken a one-eighty decision on virtual assets, claiming that they will not be accepted as a form of payment in the country. With this in mind, Russia has completed work on the Digital Financial Assets Act, which is expected to be adopted by the end of the year.

Anatoly Aksakov, the head of the Duma committee on the financial market recently took to the stage to inform citizens that the legal framework for cryptocurrencies was ready to be launched. Officials in Russia’s financial space said that cryptocurrencies need to be regulated as there were many problems associated with it.  The latest document created by the Russian government will also address how users need to proceed with cryptocurrency trading.

Russia added that the adoption of the framework will be delayed because of the current spread of the coronavirus. The country was one of several that closed its borders from foreign nationals after a massive spike in patients. Kremlin officials decided to take up the cryptocurrency issue at the moment so that a later calendar date could be set.

Aksakov stated:

“We came to the conclusion that it is necessary to define these tools, but to prohibit their use as a means of payment. The law will define digital financial assets, the procedure for their issue and circulation. It will also include the issue and circulation of digital assets secured by goods.”

The state official also revealed that cryptocurrency mining was not mentioned in the bill, but they will be taxed. According to Aksakov, mining needed to be taxed because it was an industry that produces value. The cryptocurrency industry was kept under such a watchful eye because of the frauds and scams associated with it. This was a sentiment shared by Aksakiv as well who pointed out reports that claimed the number of crimes in the field has only increased year on year.

Cryptocurrency enthusiasts had some reason to rejoice as Aksakov suggested a crypto rouble might be in the works. If such a blockchain-based asset is launched, it will be controlled by the central bank of Russia. The complete ban on cryptocurrency adoption was put forth by the Central bank but was later refuted by the State Dumas. Just recently, the Rusian Ministry of Economic Development submitted a bill to the State Duma to create “regulatory sandboxes”.

Russia had initially stepped into the cryptocurrency game when a document titled “On Digital Financial Assets” was submitted to the State Dumas. President Vladimir Putin later instructed his cabinet ministers to introduce cryptocurrency regulations, which was postponed multiple times. Now that the spring date has been set, Russia plans to test crypto and blockchain in sectors such as medicine, transport, trade etc.

 

Russian Premier Bank Signals Red For Cryptocurrency Circulation And Issuance

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Several counties across the world have entered the blockchain industry, with applications being quickly identified. Governments have also recognized that the adoption of new technology is a way to expand the current financial structure. Some countries, however, had different opinions, and Russia was one of them. Just recently, the Director of the Central Bank Department stated that they were opposed to institutions organizing the development of cryptocurrency in Russia.

Alexei Guznov, Director of the Legal Department of the Bank of Russia, recently spoke about the crypto discussion of Russian authorities. It also disclosed information on the new terms and requirements set out in the draft CFA bill. The CFA bill is being re-presented in the Kremlin, and Guznov was asked about the preparations for the second reading.

The amendments for the bill have been in the works for more than a year no and many proponents were waiting for it with bated breath. Here the Russian government also plans to understand the differences between certified securities and digital financial assets.

Speaking to Interfax, Guznov stated:

“The bill, adopted in the first reading in 2018, was oriented, rather, to the definition of digital assets, it almost did not contain the rules for their circulation. We did the work to refine the text of the project by the fall of 2019. And the main question that arose then is whether it is necessary to include digital currency in the regulatory circuit. This has become a stumbling block.”

Russia has stated that it does not want to mix crypto with other regulated assets. At present, the bill simply defines what digital financial assets are while constructing a watershed so that securities and non-cash funds do not mix. Another advantage of the bill was that it provides a basic infrastructure for organizing the issuance and circulation of virtual assets.

Although the cryptocurrency climate was improving in Russia, users still needed to be careful about the jurisdiction. According to Guznov, the ministry was against institutions that can organize the release of cryptocurrencies. The Director of the Central Bank was careful to mention that they could not completely govern the crypto assets held by somebody in the country.

The bill will ensure users adhere to the rules of the IFRS. The IFRS regulations will always have to be held up but reports claimed that a mechanism was being created where a person could present their objections too. Russia was in the throes of several financial changes and it seemed that its tussle with crypto was never-ending.

This February, the Bank of Russia had issued a new set of rules for suspicious transactions and illegal funds. With these laws, any crypto-related transaction was categorized as a potential ‘money laundering’ risk. While Russia has been banning the use of external cryptocurrencies, reports have shown that the state-backed crypto was in the works. No detailed plans have come out yet but proponents are waiting to watch what the Kremlin does with blockchain and crypto.

 

Russian Oligarch Gets Green Signal from the Central Bank to Launch Cryptocurrency

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Several countries and individuals have made cryptocurrencies a part of their economy with worldwide reach. For the past few months, Russia has been one of the most important players in the field with the country see-sawing on crypto-regulations.

Recently, Russia was again in the news when its government allowed Vladimir Potanin, the richest man in the country to launch his own blockchain platform.

Citizens will be able to buy air tickets, metals and even switch ski passes from Vladimir Potanin’s businesses with the launch of Potanin’s cryptocurrency, Atomyze.

The news of the token came a week after the FSB stated that they would ban cryptocurrencies from within the country. Potanin also said that he had plans to develop a cryptocurrency for multiple features in the future.

The Bank of Russia sending a green signal to Atomyze sends a confusing message to the masses, but that did not stop Potanin from making progress on his plans. The billionaire believed that his platform would encourage other Russian corporate giants to develop their own native blockchains and tokens.

According to reports, the Central Bank had tested Atomyze for the past four months, leading to a guarantee in its workings.

Marco Grossi, the CEO of Atomyze stated:

“The main idea of tokenization is not in buying or trading cryptocurrencies; it lies in the creation of a modern and transparent mechanism for digitizing of assets, and in the creation of new digital markets, where tokenization is a service helping issuers transfer rights to their assets into a digital form.”

Sources have also said that Potanin’s mining company, Norilsk Nickel will become the first to test out the tokens. The tokens are expected to be backed by copper, cobalt and palladium. Some of the other companies in the pipeline to test the cryptocurrency were Trafigura Group, Umicore SA and Traxys SA.

The platform will be available in the US and Switzerland but will be limited to companies and not to individuals. The official launch is expected to be around the end of this year due to a delay in the proper cryptocurrency regulations.

Potanin’s trust in crypto was evident because a fifth of Norilsk Nickel’s 2019 sales came from cryptocurrency tokens. The oligarch praised the country’s work and even exclaimed that Russia was, to some extent, ahead of many other jurisdictions.

He rejoiced in the fact that the Russian Central Bank gave him and wide mandate and vowed to make it a platform that can be easily used. Tokens backed by metals can be swapped for physical supplies where customers can use tokens to sell spare volumes to someone else.

Token holders will also be allowed to purchase Nordstar airline and ski passes at Potanin’s Rosa Khutor resort in Sochi. On an enterprise level, companies will be able to pay Norilsk Nickel through the Atomyze platform.

Other cryptocurrency enthusiasts in the country are now waiting to see if the government will reverse the ban decision because of Potanin’s influence.

Russia Plans To Ban Cryptocurrency Payments a Few Days After The Success of The Asset Tokenization Platform

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Cryptocurrencies have had a decent start to the year with improvements in price points and the adoption of its foundation blockchain technology across the globe. At the same time, the rising crypto economy is also something to look around.

 At a time when countries were planning to adopt cryptocurrencies, Russia took a complete one-eighty degree turn. Russia was divided at one point on the adoption of cryptocurrencies, but new reports claimed that the agencies in charge had decided to ban its use.

The Federal Security Service [FSB] and the Central Bank of Russia have both decided that any and all transactions related to cryptocurrencies should be banned from the country. Prior to this, the FSB was open to legalizing crypto while the Central Bank was vehemently against it. Dmitry Chernyshenko, the Deputy Prime Minister of Russia said:

“A decision was made following a meeting in the government to establish a ban on the issuance and use of cryptocurrencies as a means of payment.”

The decision came as a surprise to many because Russia was almost on the verge of legalizing digital assets. Even officials in high offices had sided with crypto usage albeit in a measured way. The new law, which is slated to be passed soon will allow existing users to convert their crypto for fiat currencies. This exchange will be conducted under the control of special operators.

The decision came as a surprise to many, as Russia was almost on the verge of legalizing digital assets. Even officials in high offices had sided with the use of crypto, albeit in a measured way. The new law, which is expected to be passed soon, will allow existing users to convert their crypto into fiat currencies. This exchange will take place under the control of special operators.

At present, if anyone wants to convert all their crypto holdings to fiat, then they would have to go through legal procedures. If the individual fails the procedure, then they can be penalized by the FSB. The turnaround comes a few weeks after Russia’s new prime minister had proposed the idea of taxing cryptocurrencies. Mikhail Mishutin had stated that cryptocurrencies can be regulated if the government could keep an eye on it.

His ideas included people revealing their crypto holdings to set a proper tax bracket. This was also Mishutin’s way of assessing economic consequences using cryptocurrencies. Russia’s latest move may be indicative of its internal steps to build its own cryptocurrency ecosystem. This fact was backed up by a new legal framework released by the Central bank for tokenizing assets.

The bank had recently revealed that it had put a platform to test that will allow users to tokenize digital assets. This would include not just currencies but also equities. After the pilot, the bank added tokenization of assets into the draft of the federal law ‘On Digital Financial Assets’. The platform was the basis on which the new cryptocurrency laws were formed.

It is still unsure if Russia will take China’s route to create its own asset. Some claim that the Kremlin has already put the wheels into motion while others have said that Russia is only interested in blockchain technology.

 

Source: International Business Times