On Friday, the Russian Finance Ministry published a working draft of a bill which proposes to legalise cryptocurrencies or “digital financial asset” as a type of security in electronic form.
Called the Digital Assets Regulating Bill, the bill sets to define and establish a regulatory practice code for cryptocurrency and related behaviour, including Initial Coin Offerings (ICOs), mining and trading on exchanges. Although only a preliminary draft, the bill gives base and shape to how Russia will look to regulate cryptocurrency.
The Finance Ministry will enable cryptocurrency trading only on licensed exchanges for digital financial assets, or through existing trading platforms. Individuals who are not qualified investors will only be able to invest 50,000 rubles ($900) in ICOs and would be limited to using special accounts and wallets, operated by something similar to a brokerage firm.
The bill will also define crypto-mining as an entrepreneurial activity which creates tokens or validates transactions in exchange for cryptocurrency. However, mining will only be recognised as legal when it is done either in a recognised entity, like a company, or if the miner registers as self-employed.
The decision by the Financial Ministry highlights the idea that giving legal status to cryptocurrency will reduce the risks of fraud and prevent a prominent underground market. It will also help increase tax revenue for the government.
Although this marks a sentiment shared by the Financial Ministry and Central Bank in addressing the growing popularity of cryptocurrencies, the Bank’s President, Elvira Nabiullina, is pushing only for the acceptance and regulation of digital tokens backed by a recognised blockchain platform.
At present, cryptocurrencies are not a recognised means of payment in Russia but the government had pledged in 2017 that it would start to accept and regulate it this year. In 2014, the Central Bank had declared bitcoin as a form of ‘quasi-money’ used for laundering and tax evasion.
A finalised version of the bill is scheduled to be released no later than the 1st of July 2018; it will be presented to the Duma (Russian State Assembly) sometime later this year.
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