Russia’s Finance Ministry Introduces Digital Currency Bill See Why

Russia’s Ministry of Finance has raised the stakes in its long-running battle with the Central Bank of Russia (CBR) by formally introducing a bill that proposes to regulate rather than prohibit digital assets.

 

The Ministry of Finance presented the government with a draft of the federal law “On digital currency” on Monday.

 

The bill is introduced to parliament for consideration at this stage of the legislative process.

The initiative’s rationale, according to the agency, is to “create a legal marketplace for digital currencies, as well as determine rules for their circulation and range of participants.”

The bill’s authors define cryptocurrencies as an investment vehicle, noting that the bill does not seek to grant digital currencies legal tender status.

The bill proposes a licensing regime for platforms that facilitate the exchange of digital assets, as well as prudential, risk management, data privacy, and reporting requirements for such operators.

 

Buying and selling crypto would be legal only through a bank account, and both crypto platforms and banks would be required to implement Know Your Client procedures.

 

The law also requires digital asset exchanges to inform retail customers about the risks of cryptocurrency trading.

 

Individuals would be required to pass a test that assessed their understanding of crypto investment practices and risk awareness.

 

Those who passed the test were allowed to invest up to 600,000 rubles ($7900) per year;

 

Those who did not pass the test were only allowed to invest up to 50,000 rubles ($650) per year.

 

Annual limits will be waived for businesses and qualified investors.

 

The bill also specifies a mechanism for crypto market participants to report their activities to tax authorities, as well as a formal definition of crypto mining.

 

The bill from the Finance Ministry comes just days after the Bank of Russia submitted its own digital asset framework for review to the Ministry.

 

The CBR’s stance has not changed: issuing digital assets and facilitating their circulation are both considered illegal.

 

Banks and other financial institutions should be prohibited from holding or transacting in cryptocurrency.

 

A new clause in the latest draft also proposes banning crypto advertisements.

 

The Ministry of Finance and the Central Bank were supposed to reconcile their positions by Friday, but they didn’t, and instead produced two contradictory pieces of legislation.

CBR’s proposals “will be considered on later stages of the bill’s development insofar as they are not at odds with the Finance Ministry’s approach,” according to the Ministry’s press release.