Russian Finance Ministry Considering Central Bank Proposals in Regulation Plans

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In Brief
  • Russia's finance ministry will consider proposals on cryptocurrencies from the central bank, on the condition they do not conflict with its own approach.

  • Last week, the finance ministry introduced draft legislation that would legitimize the market for digital currencies.

  • Reportedly dissatisfied with the proposals submitted by the finance ministry last week, the Bank of Russia affirmed its hardline stance against cryptocurrencies.

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Russia’s finance ministry will consider proposals on cryptocurrencies from the central bank, on the condition they do not conflict with its own approach.

Were the conflicting parties to find a resolution, this would pave the way for legislation governing digital assets. Last week, the finance ministry introduced draft legislation that would legitimize the market for digital currencies.

One of the suggestions offered by the proposal would be the introduction of financial literacy tests, which would ultimately determine how much individuals are allowed to invest. For instance, those successfully passing evaluation could invest up to 600,000 roubles ($7,853) in digital currencies each year, while those who fail would be limited to investing 50,000 roubles annually.

Another proposal would require any transaction involving the purchase or sale of cryptocurrency to be brokered through a Russian bank, and thus require customer identification. This may diminish the appeal of cryptocurrencies to some, going against core principles such as financial independence and anonymity. Another proposal would include foreign cryptocurrency exchanges having to obtain a license in Russia. 

Crypto roadmap

Reportedly dissatisfied with the proposals submitted by the finance ministry last week, the Bank of Russia affirmed its hardline stance against cryptocurrencies. Late last year, the central bank proposed banning cryptocurrency trading and mining, concerned over their threat to financial stability. However, the finance ministry came out advancing legislation for regulation over prohibition, allowing crypto as an investment tool, but not as a means of payment. Whereas the monetary authority has warned of inefficient energy consumption and the environmental impact of mining, the finance ministry believes it can be effectively permitted and taxed.

The discrepancy in official opinion led President Vladimir Putin to request a consensus on cryptocurrency policy between the Russian authorities. Following the agreement on a roadmap, the road for crypto legalization in Russia may finally be getting paved by Binance joining the Association of Russian Banks to help formulate a regulatory framework.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.

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