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

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Indrani bose Follow

INDIA

Feb, 23 2022

Feb, 23 2022

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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.


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Indrani bose

CBW - External Analyst

INDIA

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