Russian Ministry of Finance Draft: Allows Trading of Cryptocurrencies

According to the draft federal law "On Digital Currency" submitted by the Russian Ministry of Finance to the Russian government on February 18, although the use of cryptocurrencies as a means of payment in the Russian Federation is prohibited, it will be regarded as an investment vehicle, which allows citizens to obtain Trading cryptocurrencies with permission and customer identification.

To this end, the draft defines requirements for exchanges and dealers (operators) that can carry out activities related to the circulation of cryptocurrencies. A special operator registry will be created covering corporate governance, reporting, information storage, internal controls and audits, risk management systems and the amount of own funds. The activities of such companies will be licensed and controlled by authorised bodies determined by the government. Foreign cryptocurrency exchanges must be registered in Russia to obtain a license.

In addition, in order to protect the rights and interests of investors, exchanges will be required to remind citizens of the high risk of purchasing digital currency. Citizens must take an online test before buying cryptocurrencies, which will determine how well they know the details of digital currency investments and their awareness of possible risks. After successfully completing the test, citizens can invest up to 600,000 rubles (about $75 million) in cryptocurrency per year. If the test fails, the maximum investment amount will be limited to 50,000 rubles (about $623).

The draft also defines digital currency mining, the fixed acquisition of cryptocurrencies. The draft provides a mechanism for providing tax authorities with the information they need to exercise their control and oversight functions. In fact, Russia has the third-largest BTC hash rate in the world, and as of August 2021, Russia accounted for 13.6% of the Bitcoin network’s hash rate.

Earlier on February 18, the Ministry of Finance of the Russian Federation submitted a draft "On Digital Currency", informing the government to launch a public consultation on cryptocurrency trading rules. The ministry expects to complete a public consultation on the crypto bill by March 18.

However, despite the measures proposed by the Ministry of Finance to regulate cryptocurrencies, Russian banks have made it clear that they do not want to see any signs of adoption. Last week, Central Bank Governor Elvira Nabiullina met with Siluanov and Deputy Prime Minister Dmitry Grigroenko after a letter he had previously sent The government calls for a blanket ban on this asset class. The Bank of Russia has yet to comment publicly on the Finance Ministry's draft bill.

In Russia, the cryptocurrency market has been in the spotlight. On January 26 this year, Russian President Vladimir Putin called for the formulation and reporting of the rules reached by the government and the central bank on the regulation of crypto assets. Putin said bluntly: "We do have certain competitive advantages in this regard, especially in mining. I mean the surplus of energy and the availability of skilled professionals."