Russian ministry of finance outlines key aspects of cryptocurrency regulation
The Ministry of Finance of the Russian Federation today announced that it had sent its bill on digital currencies to the Government. The bill covers the key aspects of the proposed regulation of cryptocurrencies in Russia.
The use of digital currencies as means of payment in Russia will remain prohibited. Cryptocurrencies will be treated as investment instruments. The bill will define the requirements for exchanges and brokers that offer crypto services. There will be a special register for such businesses. If foreign crypto exchanges want to get a Russian license, they will need to register in Russia.
An investor willing to buy or sell cryptocurrencies will have to pass an identification process.
In order to protect investors, the exchanges will have to inform the public about the high risks associated with cryptocurrency investments. Individuals will need to pass online testing before getting involved in crypto investments. If an investor passes the test successfully, the investor will be allowed to invest up to RUB 600,000 a year in such operations. A failure will mean that the maximum investment will be RUB 50,000.
Qualified investors and business entities will be allowed to invest in cryptos without restrictions.
The Ministry of Finance notes that it has received the proposals of the Central Bank of Russia on banning the issue of cryptocurrencies and imposing penalties for violating the ban. The Ministry says it will take into account the central bank’s proposals while continuing its work on the bill.
In January 2022, the Central Bank of Russia posted a consultation paper addressing cryptocurrencies (unbacked cryptocurrencies and stablecoins), that is, digital currencies as defined in Russian legislation, as well as digital financial assets (DFAs) that may be used in a foreign jurisdiction to make payments (money substitutes).
In order to mitigate threats associated with the expansion of cryptocurrencies, the Bank of Russia proposes the following amendments to the Russian legislation:
- Establish liability for the violation of the statutory ban on using cryptocurrencies as a mean of payment for goods, works and services sold and bought by Russian residents, whether legal entities or individuals.
- Prohibit the organisation of the issue and/or the issue and the organisation of circulation of cryptocurrencies (including by cryptocurrency exchanges, cryptocurrency exchange offices, and P2P platforms) on the territory of the Russian Federation and establish liability for breaching this ban.
- Prohibit financial institutions’ investment in cryptocurrencies and related financial instruments, as well as the use of Russian financial intermediaries and Russian financial infrastructure to conduct cryptocurrency transactions, and stipulate liability for violating this ban.