Disregarding Bank of Russia’s concerns Russian government approved bitcoin regulations submitted by Finance Ministry


Russia's Finance
Ministry has submitted to the government a draft bill on Bitcoin regulation in
the country. Disregarding the Bank
of Russia's concerns, weeks after, the government approved to introduce the
concept of creating legislation specifically for cryptocurrencies including Bitcoin.
On Monday a
statement was released where the Finance Ministry said this cryptocurrency regulation will allow Russians to invest in assets like Bitcoin. This bill
would regulate cryptocurrencies instead of banning the new asset class and will
consider cryptos solely as an investment vehicle. Although they yet can’t make
purchases with them.
As per the
statement, the exchange should fulfill certain criteria to get a license and be
registered with the government. It also focussed on the importance of KYC (know
your customer) checks with exchanges and banks. Identification requirements, yearly
investment limits, and custody arrangements are several restrictions
provisioned by the bill on Russians who are seeking to invest in bitcoin. Russians
will need to provide their personal information to buy or sell bitcoin on
regulated exchanges.
Investors in
Russia must complete and pass a testing procedure to tests their knowledge on
investing. Those investors who pass the exam would allow investing 600,000
Russian rubles a year in crypto. But those who failed in the test would be limited
to just 50,000 rubles. As per the statement, users will not be able to withdraw
bitcoin to a self-custody wallet.
Recently, over a few weeks, the Russian government Ministry of Finance and the central bank of
Russia have been disputing cryptocurrency regulation in Russia, as they
had opposite views regarding the optimal future of bitcoin and cryptocurrency
regulation in the country. As long as the central bank's proposals on
cryptocurrencies are not at odds with the ministry's own approach to cryptocurrencies,
Russia's finance ministry said it would take their proposals into account when
drafting a proposal on digital assets. In a statement last month, one week
after the central bank called for a ban on Bitcoin mining, the Ministry of
Finance said it will be "necessary" for the development of
cryptocurrency technology.
“The use of
digital currencies as a means of payment on the territory of the Russian
Federation will continue to be prohibited,” the Ministry of Finance said in a
statement Monday. “Under the proposed regulation, digital currencies are
considered solely as an investment vehicle.”
Bitcoin
mining in Russia:
Currently, Miners
in Russia give more than 10% of the computing power used on the Bitcoin
network. In late January President Vladimir Putin called on Finance Ministry
and central bank to reach a consensus highlighting the surplus of electricity
and well-trained personnel available in the country," made Russia to have
"certain competitive advantages" in bitcoin mining.
Bitcoin mining
involves the process of verifying transactions on the blockchain and minting
new coins or tokens using powerful computers.

Indrani bose
CBW - External Analyst
INDIA