According to Russian news outlet Kommersant, news broke on Thursday that Russia and its Ministry of Finance are working on a draft legislation to legalize the use of cryptocurrencies.
The draft legislation will provide a strict regulatory framework that addresses crypto mining in detail for the first time.
It should be noted that discussions on regulations have been at the forefront of Russia’s interaction with the crypto industry. While Russia’s central bank has mostly maintained an anti-crypto stance, the Ministry of Finance and other government agencies have urged the government to regulate the space.
Will it be the “currency unit of the Russian Federation”?
The document, titled “On Digital Currency,” could finally provide Russia with a much-needed legal framework for the industry to operate in the country. The bill reportedly aims to make cryptocurrencies a recognized unit of payment and investment asset.
However, it will not be described as “a monetary unit of the Russian Federation”.
The bill will also seek to differentiate cryptocurrencies, as it says only those without “obligors” are legal in Russia. This means that assets such as Bitcoin and Ethereum may be legal in the country, while issued assets such as stablecoins may be considered illegal.
The bill also limits registration requirements for exchange operators and digital trading platform operators. These limits are mostly about how much value an entity must have in order to be approved.
There are also requirements for companies in terms of regulatory filings and announcements. Similar to the current standards for traditional financial institutions, foreign crypto companies must also establish a base in the country before operating.
Thanks for Western sanctions?
The proposed regulations come as Russia continues to face increasingly severe economic sanctions from the West over its unsanctioned and unprovoked invasion of Ukraine as early as February.
Although the central bank has said it will not use cryptocurrencies to evade sanctions, the regulatory framework could still benefit the country in the long run. It recently granted a license to Russia’s largest bank, Sberbank, which will allow it to issue digital assets.
With several of Russia’s top cryptocurrency exchanges serving crypto consumers opting not to leave the country, the new regulatory clarity provided by the country could contribute to a notable development in the space, thereby helping to mitigate the impact of sanctions.
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