Russia is planning to recognize Bitcoin and other cryptocurrencies similar to currency, According to a report published in a reputed Russian politics and business new site Kommersant.
According to the report, the Russian government and the Bank of Russia, the Russia’s central bank, have agreed on a future regime for the circulation of cryptocurrencies in Russia. Before February 18, they will prepare a draft law on the circulation of digital currencies in the Russian Federation, in which cryptocurrencies are recognized as an analogue of currencies, and not digital financial assets (DFA).
Russia Surprises With Crypto Regulation
There were multiple reports in recent past that the Russian government was planning to ban cryptocurrencies and mining activities.
Last month, Russia’s central bank even proposed banning the use and mining of Bitcoin and other digital currencies on Russian territory, citing threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty.
But, is the latest development really surprising? probably not – October last year, Russian President Vladimir Putin strengthened the validity of cryptocurrency and its acceptance as a mode of payment by saying “Crypto has the right to exist and can be used as a means of payment”.
What the upcoming crypto regulation looks like?
The report published in the local media cites that the circulation of cryptocurrencies in the legal sector will be possible only with full identification, through the banking system or licensed intermediaries.
Crypto transaction of more than 600,000 Rubles ($8,028) must be declared illegal and will become a criminal offense and an aggravating circumstance under the Criminal Code.
For the illegal acceptance of cryptocurrency as a form of payment, fines will be imposed.
Cryptocurrency mining and related issues of digital assets are not affected by the concept within which the project is being prepared.
Moving From Ban To Regulation
The government, after meetings with Deputy Prime Minister, Chief of Staff of the White House Dmitry Grigorenko, published the approved “Concept for regulating the mechanisms for organizing the circulation of digital currencies.”
Recall that the White House has been discussing the new status of cryptocurrencies and digital currencies in the Russian Federation since the summer of 2021.
In January 2021 a roadmap was created on this issue, the Bank of Russia made a consultative report proposing to ban the circulation of cryptocurrencies in the Russian Federation, the Ministry of Finance – with its own development on this topic.
The final concept is mainly based on the positions of the Ministry of Finance.
As per the latest report by Kommersant, the Ministry of Finance and the Bank of Russia must formulate either a separate bill or amendments to the law on the CFA and other laws for its implementation by February 18.
According to the report, It is highly likely that at least part of the new regulation will come into effect in the second half of 2022 or from 2023.
The details of the “transition period”, as well as mining, are not discussed by the concept. Meanwhile, they are quite important: the regulation of turnover will require quick decisions from cryptocurrency owners – whether they should move into the emerging legal market segment, get rid of such assets, or stay in the illegal sector. The main difference between the concept, which, in fact, implements the Central Bank’s strong distrust of cryptocurrency, is the proposal to develop amendments to the Criminal Code and the Code of Criminal Procedure, according to which evasion of declaring transactions with cryptocurrency will become a criminal offense, and its use will become an aggravating circumstance in other offenses.
In all other respects, the cryptocurrency in the Russian Federation, in essence, will be recognized as a close analogue of foreign currency (and not CFA).
The possession of cryptocurrency in the jurisdiction of the Russian Federation and transactions with it (as well as with the dollar) are not prohibited – but only through the “organizer of the digital currency exchange system” (a bank with a universal license) or a p2p exchanger legalized in the Russian Federation.
The mode of operation of the legal segment involves the full identification of the client according to banking rules, work taking into account AML / CFT requirements, all information about transactions through the Transparent Blockchain system of Rosfinmonitoring will be available for state control in the same way as transactions with non-cash rubles or foreign currency on bank accounts.
The mode of control of transactions with the cryptocurrency of individuals, however, is described by the concept as not too different from the mode of control of cash transactions with any currency. Most likely, the main argument “for” was that in the USA, the EU and Japan they are inclined to the same or to strict bans, as in China, which was also proposed by the Bank of Russia.
Experts on the prospects for the implementation of the government’s cryptocurrency concept
So far, the most intriguing is the organization of the legalization of the existing undeclared cryptocurrency, which is not described in the concept. Market participants have no doubts that the possibilities of working with “legal crypto” in the implementation of the concept are adequate.
The same part of the owners who prefer to remain in the sector illegal for the jurisdiction of the Russian Federation depends on the future taxation of operations with cryptocurrencies (from the meaning of the concept it follows that it should not differ from the principles of holding foreign currency) and on the rules of legalization.
The Ministry of Finance’s estimate of the total amount of crypto assets in the Russian Federation has not changed – it is 12 million crypto wallets with assets worth 2 trillion rubles. It is decidedly unknown whether this figure takes into account the cryptocurrency used in the criminal sector.
Bitcoin Price Action
Bitcoin was trading at $44,172.93 at the time of writing. according CoinMarketCap data Bitcoin 24-hour trading volume was $357 billion. Bitcoin was up 1.82% in the last 24 hours.
Read Also: Russia Signals Possibility Of Replacing US Dollar Reserves With Digital Assets
