Russia’s Finance Ministry Submits Draft Crypto Regulations Amid Industry Uncertainty

Moscow - In an effort to clarify the country’s cryptocurrency landscape, Russia’s Finance Ministry has submitted a draft of long-awaited regulations to the government. The proposed rules aim to address the current ban on crypto payments for goods and services, set a cap on the amount of rubles that can be invested in cryptocurrencies, and define what it means to mine cryptocurrencies.

Proposed Regulations

According to Finance Minister Anton Siluanov, the ministry hopes to have the regulations passed into law by the end of the year. The move comes as Russia’s cryptocurrency market continues to grow, valued at over $200 billion in early February - about 12% of the global market.

Industry Insights

• Russia is home to the world’s third-largest cryptocurrency mining industry, behind the United States and Kazakhstan.
• “Russia is uniquely positioned to serve crypto miners due to its excess of cheap electricity, cold climate that reduces demand for cooling systems, and reliable electricity grid,” said Thomas Galovich, Investment Director at BitCluster, one of Russia’s largest bitcoin mining companies.

Mixed Reactions from Industry Experts

However, the draft proposal has been met with mixed reactions from industry experts. While some welcome the move towards regulation, others express concerns over the potential impact on the market.

Concerns Over Regulations

• “The inconsistency is difficult to navigate,” said Mike Bystroff, a law partner at the Digital Rights Center handling fintech and crypto practice. “It all depends on the local tax authority, because while some will accept what you fill out in the form, some won’t.”
• “We have repeatedly seen statements [on regulation] by senior officials from various departments,” said Artem Kozlyuk, head of privacy NGO Roskomsvoboda. “Those departments change their positions over time.”

Uncertainty Over Regulation

The Russian government has been sending mixed signals on cryptocurrency regulation for years. In January, the Central Bank called for a total ban on cryptocurrencies, citing concerns over their risks to individual investors and potential use in funding black market goods. However, Finance Ministry officials have taken a more lenient approach, arguing that the industry needs clear regulations to operate legally.

Draft Proposal vs. Central Bank’s Proposal

• The draft proposal comes after a long-standing debate between the Finance Ministry and Russia’s Central Bank.
• The Central Bank has submitted its own proposal, which includes a ban on issuing and circulating private cryptocurrencies and new restrictions on advertising.

Experts Agree: Clear Regulations Needed

Despite the uncertainty, experts agree that clear regulations are necessary for the industry’s growth and stability.

Quotes

• “I’m waiting for some official way to do that,” said Alexey Arkhipov, a blockchain expert and founder of multiple blockchain-based startups. “I think any regulatory approach which will be clear will be helpful.”