Russia To Regulate Crypto Instead Of Ban

February 11, 2022 10:17 pm Comments

Recently, the Russian government has made a switch in plans and has decided to regulate cryptocurrencies instead of a complete ban which adds another country to the growing list of places where crypto operates legally.

Government documents show plans key principles that would decide how the regulation would work and surprisingly has the support of the central bank which had a previous reputation of being against the emerging industry.

In the country, there are currently 12 million crypto accounts that are in use that total around $26.7 billion which makes it a sizeable market that is consistently growing over time.

Because of the size of it, law enforcement is still uneasy as there are concerns about being unable to adequately regulate crypto particularly to concerns that are related to crimes.

CoinDesk reports:

With such a large volume of crypto, law enforcement agencies are concerned they can’t adequately approach crimes involving crypto, the document said.

Yet, it stopped short of the draconian measures suggested in January by the Bank of Russia.

The central bank’s report called cryptocurrencies a threat to Russia’s financial stability and rife with fraud. The regulator suggested banning cryptocurrency trading in Russia, as well as mining.

Instead, Russians would have access to the digital ruble, the central bank digital currency in the works by the Bank of Russia, and digital assets issued inside the country by licensed companies.

By contrast, the government’s blueprint released Tuesday says cryptocurrency purchases in Russia may take place, but only through locally registered and licensed companies so that users are fully verified and information about their transactions can be made available to government agencies.
The document does not address cryptocurrency mining. Many of the stipulations require parliament to pass new laws.

Going into the details of the proposals, it mentions that crypto related transactions that are above a certain size must be reported to the Federal Taxation Service.

Any failure to report would be considered a felony in the country indicating the regulations that are strict and require reporting to the government.

Banks would also act as the middle man between users and crypto exchanges where everyone would need to provide proof of their identification and transactional history.

The crypto businesses themselves would also have to be registered with a license and satisfy certain financial requirements that apply to traditional financial institutions.

As a response to the new proposals on how crypto would be regulated in the country, the market reaction seemed somewhat positive as it had coincided with the recent market recovery.

Yahoo reports:

Bitcoin’s price rose about 3% Wednesday morning in the U.S. Russia’s embrace might be having “some level of influence” on the bellwether cryptocurrency’s price, said Armando Aguilar, an independent crypto analyst.

Other market factors including KPMG Canada adding BTC to its balance sheet and the U.S. Justice Department’s recovery of $3.6 billion in bitcoin from the 2016 Bitfinex hack could also be buoying prices, he said.

“We could see other governments adopting BTC in the near future with Russia making the move,” Aguilar told CoinDesk in a Telegram message.

Anto Paroian, chief operating officer at digital assets investment firm ARK36, said Russia’s move “reflects a broader shift in regulatory attitudes towards these assets in various jurisdictions around the world.”

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