Financial Crime World

Russian Federation Introduces Bill to Regulate Crypto Trading and Mining

The Russian Ministry of Finance has submitted a bill to parliament aimed at regulating the trading and mining of cryptocurrencies in Russia.

Background

Despite opposition from the Bank of Russia, the government is pushing for a clearer framework for the burgeoning cryptocurrency market. The proposed legislation is based on a roadmap drafted by various government bodies, including law-enforcement agencies.

Key Features of the Proposed Bill

Here are some key features of the bill:

  • Treating Cryptocurrencies as Investment Tools: The bill treats cryptocurrencies as an investment tool rather than a legal tender, prohibiting their use to pay for goods and services.
  • Requirements for Crypto Exchanges: Crypto exchanges and over-the-counter desks must obtain licenses and be registered with the government. Foreign crypto exchanges operating in Russia will need to register legal entities within the country.
  • User Requirements: Users will need to undergo know-your-customer (KYC) checks with both banks and cryptocurrency exchanges, as well as pass online tests to demonstrate sufficient knowledge about cryptocurrencies and related risks.
    • Investment Limits: Investors who pass the test will be allowed to invest up to 600,000 rubles per year in crypto, while those who do not will be limited to 50,000 rubles. Qualified investors will have no limits on their investment amounts.
  • Exchange Requirements: Crypto exchanges must keep their own crypto and users’ funds in separate accounts, maintain records of all user crypto addresses, and ensure that users are not held liable for any debt incurred by the exchange.
  • Regulation of Cryptocurrency Mining: Cryptocurrency mining will also be regulated under the proposed bill, with dedicated government agencies responsible for supervision. The exact details of these regulations have yet to be released.

Controversy Surrounding the Bill

The Bank of Russia has been pushing for a stricter approach, suggesting fines of up to 500,000 rubles (approximately $6,360) for individuals and 1 million rubles for companies caught engaging in cryptocurrency trading or issuance. However, the Ministry of Finance has indicated that it will consider the Bank’s objections “where they don’t contradict the Ministry of Finance approach.”