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Key Russian financial authorities have radically different views on crypto regulation.
In a letter to Prime Minister Mikhail Mishustin, said that the country should regulate, rather than ban cryptos. He also said that crypto regulation would bring in an additional $2.3 billion in taxes to Russia.
To make regulation more effective, he suggested allowing banks to provide exchange services. This would allow licensed banks to buy and sell crypto from customers.
He also advocated regulation for crypto markets that would put them on an equal footing with commodity trading.
Firstly, all crypto exchanges will need licensing. Providing exchange services without a license would be a criminal offense. Moreover, all crypto exchanges would have to abide by “know your customer” rules. These rules mandate that banks and exchanges collect real IDs from customers.
He added that the Bank of Russia and Russia’s anti-money laundering agency have to track all crypto transactions. Most blockchain networks are transparent, which allows anyone to use tracking tools.
The proposed regulation, the Finance Ministry believes, would lead to more income for the state. Namely, Russians own about $214 billion in crypto assets. That means that regulation could bring some $2.3 billion in taxes to Russia.
Bank of Russia Crypto Ban
Both the Finance Ministry and the Bank of Russia agree that crypto assets are not money.
Some [people] mistakenly consider [cryptocurrencies] money, although they are not.
BoR’s head of financial stability, Elizaveta Danilova said that, unlike money, holding crypto comes with a substantial risk.
These risks will be excessive and we expect that more and more countries will come to the conclusion that cryptocurrencies should be banned
However, she added that they are willing to coordinate proposed measures with the government, as requested by Putin.
Putin Sides With Crypto
The comments come after the Bank of Russia proposed a total ban on all crypto mining and trading. However, the move faced opposition from Russia’s President Vladimir Putin.
Putin backed the government’s efforts to regulate crypto. He also said that Russia has a competitive advantage in mining Bitcoin. Moreover, he said that a ban on crypto would mean an attack on technological innovation.
We have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.
Therefore, it is clear that Putin sided with the government on crypto regulation. However, he has decided to leave the details of this regulation to financial authorities.
I would ask both the Government of Russia and the Central Bank to come to some kind of unanimous opinion during the discussion… in the near future
Other Russian politicians also came out against a crypto ban. Andrey Lugovoy, head of the Committee on Security and Anti-Corruption of the State Duma, also came out against the ban. He said that a ban on crypto would lead to a growth of the black market.
Investors are still unsure how new regulations would affect the crypto market. In any case, new rules will likely only come out near the end of the year.