The Russian government is considering the creation of regulatory sandboxes to allow four regions to work with blockchain technology and cryptocurrencies.
Moskow, Kaliningrad Oblast, Kaluga Oblast, and Perm Krai will test the innovative concepts that are not permitted by the existing legal framework, local media outlet Izvestia reports, citing the sources from the Russian Ministry of Economic Development and Trade (MEDT).
The chosen regions will create so-called ‘regulatory sandboxes’ to test new technologies — including blockchain technology, digital currencies, neurotechnology, quantum technology, artificial intelligence, virtual reality, and augmented reality.
Russian Regulation is Out of Sync
Experts support the initiative as further economic development is hardly possible without new technologies. Many startups and businesses are struggling to bring their disruptive ideas to the market, due to the vague and often unfriendly regulatory environment in Russia.
The existing laws are often out of sync with economic realities, as legislators lag behind innovators, the member of the Presidential Council on human rights and civil society development Kirill Kabanov explained. For example, cryptocurrencies have been circulating globally for years, but they are still in a grey regulatory area in the vast majority of countries, with Russia being no exception.
Business Is Skeptical
The Deputy Minister of MEDT, Savva Shipov, confirmed to Izvestia that the agency aims to stimulate innovative activities and speed up the roll-out of homemade high-tech products and solutions by creating more flexible regulatory rules and legal requirements.
The law on regulatory sandboxes will allow for experimenting with concepts that are outside of the existing legal framework to see how best to adapt regulations to embrace the new reality. This approach is often used in financial services to decrease legal risks for market participants and speed up the launch of innovative products.
However, market participants harbor no illusions about the future of the initiative as businesses will get entangled in legal peculiarities and red tape when moving from local regulations to a general regulatory framework.
According to Vladimir Tsiymberg, head of pharma company Biovitrum, companies will have a hard time launching their products in a broader market. It is hardly possible that federal regulatory and monitoring authorities will soften their stance on cryptocurrencies and other innovative concepts— even if they proved to be secure within the sandbox.
Russian Regions Are Making Their Choices
The press-service of Kaluga Oblast says that the region is interested in big data management, while Kaliningrad is looking into blockchain development and intellectual rights management. The latter region wants to attract intellectual resources and bet on biotechnologies, among others, to compensate for a disadvantageous geographical location and a lack of natural reserves.
Do you believe that the sandbox approach may speed up innovation and stimulate the adoption of new laws and regulations in Russia? Let us know what you think in the comments below.