Russia Moves to Regulate Cryptocurrency Trading, Legitimizing $2 Trillion Asset Class
In a surprise move, the Russian government has decided to regulate cryptocurrencies rather than ban them, clearing the way for a potentially massive asset class to operate legally in the world’s 11th-largest economy.
Regulation of Cryptocurrencies
The decision was revealed on Tuesday evening with the release of a document outlining the principles for regulating cryptocurrencies. The plan has the backing of the central bank, which had previously called for a blanket ban on crypto mining and trading.
Key Requirements
- Cryptocurrency exchanges and peer-to-peer marketplaces must register as legal entities
- Exchanges must join an official register of digital-currency exchange operators
- Exchanges must open a crypto account with an authorized bank
- Foreign exchanges must have an office in Russia and be registered there
Impact on the Market
The move has sent shockwaves through the cryptocurrency market, with bitcoin’s price rising around 3% on Wednesday morning in the US. Experts believe that Russia’s embrace of cryptocurrencies could have a significant impact on the global market, potentially paving the way for other governments to follow suit.
Expert Insights
“The political and economic cost of banning” crypto will outweigh the risk to governments from allowing it to “coexist with legacy financial institutions.” - Anto Paroian, Chief Operating Officer at ARK36
Speculation About Russia’s Motivations
Some believe that Russia could be using bitcoin as a way to hedge against aggressive US foreign policy, while others see it as a means of generating huge tax revenue. Regardless of the reasons behind the decision, one thing is clear: Russia’s move marks a significant shift in regulatory attitudes towards cryptocurrencies around the world.
Timeline
The new laws and directives are likely to come into force in the second half of 2022 or early 2023.
Conclusion
Russia’s decision to regulate cryptocurrencies rather than ban them has sent shockwaves through the market. The move could have significant implications for the global cryptocurrency market, potentially paving the way for other governments to follow suit.