The Russian government and the central bank of Russia have reached an agreement to treat crypto assets, like Bitcoin, as currencies. The aforesaid development was broken and brought to light by Kommersant, a nationally distributed daily newspaper published in Russia devoted to politics and business.
As per the said report, the government and the Bank of Russia have agreed on a future regime for the circulation of cryptocurrencies in Russia. As per the translated version, a draft law on the circulation of digital currencies is set to be prepared before 18 February in which, cryptocurrencies will be recognized as an analog of currencies, and not digital financial assets. As per Kommersant,
At least part of the new regulation will come into effect in the second half of 2022 or from 2023.
Their circulation in the legal sector would be possible only with full identification, through the banking system or licensed intermediaries. Operations equivalent to more than 600 thousand Rubles would have to be declared, while transactions outside the legal sector for such amounts would be treated as a criminal offense and an aggravating circumstance under the Criminal Code. Additionally, fines would be introduced for the illegal acceptance of cryptocurrencies as a means of payment.
Crypto clarity finally?
Russia has not had a clear-cut stance concerning cryptos. Just in September, the Central Bank had ordered local banks to block cryptocurrency transactions. In mid-Jan this year, Anatoly Aksakov at the Russian parliament expressed his worry against crypto and insisted the crypto owning population declare their digital assets. Right after that, the central bank had called for an outright crypto ban by outlining the threats it brought to financial stability, citizens’ wellbeing, and its monetary policy sovereignty. Alongside, a mining ban too was proposed.
However, the details of the “transition period”, as well as mining, were not discussed by the latest concept. As per Kommersant’s report,
Mining and related issues of DFA are not affected by the concept within which the project is being prepared.
However, other recent reports suggest that President Putin is backing plans for regulating the country’s crypto mining industry. As per Bloomberg, he seconded a proposal to tax and regulate mining of cryptocurrencies, rejecting the central bank’s proposal to ban it completely.
Additionally, in a recent message to the Chinese people, Putin sort of signalled how Russia was working on expanding settlements in national currencies.
In his letter, the Russian president wrote,
“We are consistently expanding settlements in national currencies and creating mechanisms to offset the negative impact of unilateral sanctions.”
Now, with Bitcoin and other cryptos to be treated as currencies, we might get to see payments being carried out with this asset class. Also, it is a known fact that China had banned mining last year due to the energy crisis it was facing. And now, with China and Russia’s “strategic partnership,” things might change.
In the same letter, Putin went on to shed light on how “a mutually beneficial energy partnership was being formed” between the two countries. Even though he hadn’t explicitly stated Bitcoin or mining, joining the dots would highlight his implied interest in the crypto arena.
Footnote
Russians have been one of the most active sets of people in the crypto space. Cumulatively, they hold cryptocurrencies worth over $214 billion or 16.5 trillion Rubles. The same equals 12% of the world’s crypto holdings. With the proposed regulations now in place, this number could be expected to rise even further going forward.