Russian Finance Ministry Proposes Strict Cryptocurrency Regulation Bill
The Russian Ministry of Finance has developed a rather strict draft law on cryptocurrencies. The Ministry has submitted the federal bill “On Digital Currency” to the Russian Government, which legally outlines the regulatory framework for the cryptocurrency market in Russia, as previously approved by the Cabinet.
According to a press release on the Ministry of Finance’s website: “The use of digital currencies as a means of payment on the territory of the Russian Federation will remain prohibited. Under the proposed regulation, digital currencies are considered exclusively as an investment tool.”
Key Provisions of the Draft Law
- Cryptocurrencies are banned as a means of payment in Russia and can only be used as investment instruments.
- Only exchanges and operators included in a special registry and holding a specific license will be allowed to conduct cryptocurrency transactions. Foreign crypto exchanges will need to register in Russia to obtain a license.
- Buying and selling cryptocurrencies will only be possible after client identification. Depositing and withdrawing cryptocurrencies will be allowed only through banks using a bank account. Both operators and banks must conduct compliance checks and report suspicious transactions to Rosfinmonitoring (the Russian financial monitoring authority).
- Before purchasing cryptocurrency, citizens will have to pass an online test on the specifics of such investments. Those who pass the test will have an annual investment limit of 600,000 rubles, while those who fail will be limited to 50,000 rubles (currently about 0.015 bitcoin). Qualified investors and legal entities will be able to conduct transactions without restrictions.
- Exchanges are required to separate their own cryptocurrency holdings from those of their clients. Exchanges and exchangers must keep registries indicating the address identifiers of each digital currency holder.
- Cryptocurrency owned by citizens and companies cannot be seized to cover the debts of a trading platform operator.
- The bill also proposes to legally define digital mining as an activity aimed at obtaining cryptocurrency.
“The proposed changes are aimed at forming a legal digital currency market by establishing rules for its circulation and defining the circle of participants,” the Ministry of Finance stated.
Disagreements with the Central Bank
The Central Bank of Russia also participated in drafting the document on digital currency regulation and recently presented its own version. However, there are fundamental disagreements between the two agencies: for example, the Central Bank proposes fines for cryptocurrency mining as well as for buying and selling cryptocurrencies.
The Ministry of Finance has promised to consider the Central Bank’s proposals that do not contradict its own approach in further work on the bill. As noted by the head of the Ministry, Anton Siluanov, cryptocurrency has already become an objective reality, and ignoring it would be wrong. According to him, legalization is preferable to a ban.