Digital Assets: Russia’s Continuing Ambivalence on Cryptos

March 18, 2020 | Digital Assets, News

Russia’s regulatory machinery seems unable to make up its mind on cryptocurrencies.

In a somewhat dramatic U-turn, Russia’s central bank, the Bank of Russia, may ban outright dealings in cryptocurrencies. Alexey Guznov, head of the bank’s legal department, said that the country’s draft bill “On Digital Financial Assets,” which is still hanging fire, may be amended to impose the aforesaid ban. (Coin Telegraph)

Russia’s endless soul-searching on cryptos

The “On Digital Financial Assets” bill, in its original avatar, took a more charitable view of dealings in cryptos. It allowed trading of cryptos in Russia.

However, the Russian regulators appear to have again got religion around the stability of financial systems and safety of investors.

(Recall that last month the central bank issued rules regarding dubious financial transactions which labeled cryptos as a money laundering risk)

Said Guznov:

“In terms of the functioning of the financial system and consumer protection system, legalization of the issuance and facilitating the circulation of cryptocurrencies is an unjustified risk. As such, the bill explicitly prohibits emission and organization of cryptocurrency circulation, introducing legal liability for violating these rules.”

It appears that the new bill, which may be passed later this year, will effectively outlaw all transactions in cryptocurrencies. However, holding a stock of cryptos is permissible.

Guznov also clarified that the proposed bill would prohibit Russian financial institutions from issuing cryptocurrencies.

What if someone violated the law relating to dealing in cryptos? No clarification from Guznov on this point, but an interesting observation by him was:

“If a person who owns, for example, Bitcoins, completes a transaction in a jurisdiction that does not prohibit this, we are unlikely to be able to regulate that.”

Related Story: Digital Assets: South Korea’s Rethink on its CBDC Strategy

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