Odaily Translator | Nian Yin Si Tang

Odaily Translator | Nian Yin Si Tang

The Russian government and the country's central bank have reached an agreement on how to regulate bitcoin and other cryptocurrencies, planning to treat the digital asset as a form of money.

documentdocument, the government is expected to introduce a draft law by February 18.

“The state (Russia) will regulate the circulation of such financial assets, imposing strict obligations on all participants of the professional market and emphasizing the protection of the rights of ordinary investors,” the document said.

to reportto report, the new legislation will bring cryptocurrencies into the same regulatory framework as foreign currencies.

The new legislation will not take effect immediately, which will require the Russian government to pass new laws and directives, which could happen as early as late 2022 or early 2023.

A few weeks ago, the Bank of Russia proposed a blanket ban on cryptocurrencies, but faced strong opposition from the country’s finance ministry.

expressexpress, Cryptocurrency has the characteristics of pyramid schemes, undermines the sovereignty of monetary policy, and poses a threat to the Russian financial system.
"In emerging markets, including Russia, the potential financial stability risks associated with cryptocurrencies are much higher. This is due to people's traditional preference for saving in foreign currencies and their insufficient level of financial literacy," the report said.
The Central Bank of Russia also said that the crypto mining industry undermines the country's green agenda, endangers Russia's energy supply and amplifies the negative impact of the spread of cryptocurrencies, creating incentives for attempts to circumvent regulation.
The Russian central bank’s tough stance against cryptocurrencies matches that of Russia’s security services, according to two people familiar with the matter. The security sector has also backed a domestic competition ban to prevent cryptocurrencies from being used to fund the country’s opposition.

expressexpress: "The regulation of the cryptocurrency market will make it possible to protect the rights of citizens. The first thing that should be done is to protect the interests of citizens, consumers of such services, those who purchase these assets or use cryptocurrencies in some other process solution ...in this regard, in my view, regulation is needed, not prohibition. Regulation will make it possible to support transparency and thus protect citizens."
The Russian finance minister added that the ministry had prepared a concept for regulating the cryptocurrency market and sent it to the government office for review. The Ministry of Finance is actively involved in developing legislative initiatives from the standpoint of regulating such markets. We have a regulatory concept ready, we are discussing it within the Treasury and we have recently sent it to the government office. So far we have not taken a decision on this concept; the government has no official position, but this is our field of activity.

With the Russian government and central bank reaching an agreement on the issue, the feud between the two sides will end.

New legislative proposals propose that the purchase of cryptocurrencies in Russia must be made through licensed, locally registered companies with full user identities.

In other words, the new legislation will allow banks to act as intermediaries between users and crypto trading platforms.

secondary title

Track User Transactions

Additionally, the new law will force foreign cryptocurrency exchanges to set up separate offices in Russia.

Both domestic and foreign companies are required to check transactions for illegal activities and keep user transaction data for at least 5 years.

If the draft law is passed, all cryptocurrency transactions over 600,000 rubles (about $8,000) will have to be reported to the Federal Tax Service (FNS). Failure to do so may be considered a crime.

Notably, the proposal states that banks working with crypto exchanges will not be able to use blockchain analysis tools offered by companies such as Chainalysis or Elliptic.

Instead, they will have to use a tracking tool developed by Russia's Federal Financial Monitoring Service (Rosfinmonitoring).

According to the filing, the tool, dubbed "Transparent Blockchain," could help identify cryptocurrency wallet owners and be able to glean information from the dark web to identify patterns of illicit use of digital assets.