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9 Feb, 2022 03:08

Russia rolls out plan to regulate cryptocurrencies

Moscow rejects the idea of banning cryptocurrencies, seeking to integrate them into Russia’s financial system instead
Russia rolls out plan to regulate cryptocurrencies

The Russian government has adopted a framework for laws regulating cryptocurrencies. A stated goal of the new policy is to integrate digital tokens into Russia’s financial system while ensuring the rights of private investors and preventing digital assets from being used to finance crime.

“The government has determined the future of digital currencies in Russia. The circulation of such financial assets will be regulated by the state with strict obligations for all participants of the professional market with an emphasis on protecting the rights of private investors,” Moscow’s official press service said in a statement on Tuesday.

When all the regulatory mechanisms are in place, cryptocurrencies will be effectively integrated into the existing financial system, the statement continued. In addition to dividing investors into the categories “qualified” and “unqualified,” the plan envisions heavy regulation of crypto exchange mechanisms and platforms. Thus, the regulation is set to eradicate one of the main perks of digital currencies – anonymity – as people trading in them will be required by law to properly identify themselves.

Trading real currencies for crypto will be allowed only through “organizers of the systems of digital exchange” – licensed banks registered in a special system which can track cryptocurrency operations, identify individuals engaging in them, as well as keep records of transactions for five years. Among other things, the measures aim to identify illegal activity, including the use of crypto to finance terrorism. 

Foreign crypto exchanges will be allowed to operate in Russia provided they are licensed in the country that they are registered in and have a representative office in Russia. Such platforms should be “technically integrated” with the banks that serve as organizers of the systems of digital exchange. Those registered in tax havens will be disqualified from operating in the country altogether.

While the regulation of cryptocurrencies has been the subject of heated debate in Russia for years, digital tokens are still in a gray zone. The situation around the tokens has been further complicated by the stance of the country’s Central Bank, which reportedly pushed for a blanket ban on cryptocurrencies. While the regulator’s head, Elvira Nabiullina, has openly voiced her skepticism about the tokens, she stopped short of an explicit call to make them illegal.

“There are big risks for small investors due to high volatility, cryptocurrencies are often used for illegal operations, criminal in their essence, they are not transparent, so we cannot welcome investments in such assets,” she said late in December.