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Russian finance ministry submits bill on regulation of cryptocurrencies to government

According to the bill, the use of cryptocurrencies as a payment instrument will still be prohibited on Russian territory, while digital currencies are considered solely as an investment instrument

MOSCOW, February 21. /TASS/. Russia’s Finance Ministry has submitted a bill on the regulation of cryptocurrencies to the government, according to the ministry’s statement released on Monday.

"The Finance Ministry of Russia drafted the bill on regulation of cryptocurrencies and submitted it to the government of the Russian Federation on February 18, 2022," the statement said.

According to the bill, the use of cryptocurrencies as a payment instrument will still be prohibited on Russian soil, while digital currencies are considered solely as an investment instrument. Moreover, a special register of exchanges and exchange offices that will be able to conduct operations connected with organizing the circulation of digital currencies, will be created in Russia, according to the bill. The ministry also put forward the idea of dividing investors up along the lines of their skill level for entering the cryptocurrency market by way of testing, and setting an investment threshold.

Upon successfully passing the said test, citizens can invest up to 600,000 rubles ($7,700) in digital currencies per year, whereas for those who fail to make the cut from the test, the ceiling amount of investment would be limited to 50,000 rubles ($646). Qualified investors and legal entities would be able to perform transactions without any limitations.

The bill sets the definition of digital mining as activity aimed at receiving cryptocurrency. It also suggests a mechanism of providing tax bodies with information necessary for fulfilling control and supervisory functions by them.

The Russian Finance Ministry noted that it had received the proposals on banning the organization of issuance and circulation of digital currencies, as well as on introducing liability for relevant offenses, from the Bank of Russia. The regulator's proposals will be considered in future work on the bill.

Debate about regulating cryptocurrencies

The debate between the Central Bank of Russia and the government around the legalization of mining and the circulation of cryptocurrencies remained dormant before the beginning of this year, but got fired up when the regulator announced in early 2022 that it strongly opposed such activities.

The Bank of Russia published a report in January, putting forward a ban on the issuance, mining and circulation of cryptocurrencies countrywide in a move to reduce the threats related to the proliferation of cryptocurrencies. According to the document, the status of the Russian ruble, which is not a reserve currency, would not make it possible to use a soft approach in the country and ignore the mounting risks. The dangers particularly lie in the threat to financial stability, the public’s prosperity and the withdrawal of savings from the economy, the regulator believes. Due to that the Central Bank suggested imposing a total ban on organizing the issuance and circulation of cryptocurrency on Russian soil and establishing liability for its violation.

In February, the Russian government approved the concept for the legislative regulation of the circulation of digital currencies based on the Finance Ministry’s proposals. They envision the regulation of cryptocurrencies in Russia without prohibiting them, but to do this it would be necessary to ban the Internet in the country as well, Finance Minister Anton Siluanov said jokingly in an interview with the Rossiya-24 TV news channel. The ministry believes the absolute lack of regulation of cryptocurrencies or their full ban would destabilize the sector, bolster the shadow economy and drive fraud up, and law enforcement will not be sufficiently equipped to efficiently tackle such crimes with the tools available.