May 24, 2024
Russia crypto-regulation

With the tensions and escalation on the Russia-Ukraine border, the Crypto market uncertainty continues. In the past few days, the digital currency market has shown signs of recovery, however, with the latest announcements about the impending potential confrontation, it began to retreat slightly.

Bitcoin managed to reach $45,800 during this week and Ethereum got to $3,270.

Russia To Regulate Crypto as a Form of Currency

It seems that the Russian government and the Russian central bank have managed to come to an agreement on how cryptocurrencies should be considered.

While the country’s central bank earlier this month proposed banning mining, crypto-trading, and digital asset transactions, due to the threat they are believed to pose to the country’s financial stability and monetary policy, the director of the Russian finance ministry’s policy department, Ivan Chebeskov, said that Russia should instead regulate the cryptocurrency market, rather than ban it altogether.

After all, it would be a shame for the country to turn its back on an industry that is reportedly worth more than $2 trillion in Russia alone (spread across more than 12 million cryptocurrency wallets within the country), according to the Russian government data.

Bitcoin mining is also a major business in the country, as the country ranks 3rd in the world. Overall, Russians are some of the most active people in the crypto market.

russia money

Treating Bitcoin as a Currency

That said, the two government entities seem to have some common ground – they are currently working on a bill aimed at better regulating the crypto-currency market to offer a more transparent framework, so the digital currency industry can be bought out of the shadows and support further entrepreneurship in the industry. However, there is no mention of how crypto mining should be regulated.

In this bill, cryptocurrencies are labeled as “analog of currencies”, instead of digital financial assets. While this might mean that Bitcoin and other tokens may be considered a form of currency in the country, it’s still far from the example of El Salvador recognizing Bitcoin as a legal tender.

Still, the changes in the country’s stance towards cryptocurrency seem to reflect a broader shift towards more regulation and more adoption. Some analysts believe that other countries might adopt Bitcoin in the near future, with Russia perhaps being one of the first.

The regulation of cryptocurrencies in Russia

If adopted, the draft law on the regulation of cryptocurrencies in Russia will certainly wipe out anonymity in the country’s crypto sector. Cryptocurrency exchanges, as well as peer-to-peer marketplaces, for instance, are required to fully identify their users and declare their transactions.

Much personal information will be shared, such as name, address, date of birth, e-mail, phone number, bank account details, including bank account number, expiration date and CVC code of the card used to purchase virtual assets, identity documents, photo of the user, as well as data about the crypto-transaction itself like date, time, amount, currencies used, the recipient and sender data.

Moreover, the report (in Russian) declared that crypto-transactions over 600,000 rubles (around $8,000) have to be declared to the Federal Taxation Service.

Like traditional financial organizations, exchanges will have to be registered as legal entities and licensed intermediaries to be able to operate in the country, which means that they will have to open a crypto account through an authorized bank and observe various compliance requirements.

Investors will have to wait for the bill to be submitted on February 18th to understand the potential impact on the crypto market.