update 18 August 2021

Russian Goververnment to Pilot Crypto and Blockchain in Regulatory Jurisdiction

The Russian government could soon create regulatory sandboxes for companies working on cutting-edge technologies like artificial intelligence and distributed ledgers. A Russian Federal Ministry has initiated legislation that would legalize crypto and its underlying blockchain technology within a particular regulatory jurisdiction.

Local news reports say that the Ministry of Economic Development has assembled a draft law that will allow the testing of crypto and blockchain development within unique ‘regulatory sandboxes.’ A few days ago, the draft was introduced to the state Duma, the Federal Assembly of Russia’s lower house.

Introduced by Prime Minister Mikhail Mishustin in a new bill on March 17, the plan does not explicitly mention blockchain or cryptocurrencies. Still, an explanatory note says distributed ledger as one of the technologies explored in the new experimental regulatory regimes.

Regulatory Regime

People can employ Regulatory regimes in new technologies to live-test. Such technologies include; medicine, public services, trade, construction, distance learning, transportation, financial markets, online commerce, and several other sectors. The bill allows Russia’s regulators to deal with novel tech more flexibly and set up local sandboxes’ regions.

It could also unlock experimental testing of remote diagnostics, crewless vehicles, and personal data usage without written consent.

Russia’s First Deputy Prime Minister noted a specific list of legal norms that residents of the ‘regulatory sandboxes’ may not follow in another document dubbed “satellite” bill. The government approved law cannot be implemented by Russia without the satellite bill.

According to the report, crypto and blockchain players of the ‘regulatory sandboxes’ will be given regulatory relief considering the minimum size of capital, reserve funds, and reporting. The report added that they would also be exempted from Russia’s foreign exchange law. 

Developing the Digital economy

The central bank, the Bank of Russia, will be in charge of the sandboxes linked to fintech. Representatives of the Economic Development Ministry, which instigated the bill, told the Russian newspaper Izvestia that fintech projects working within sandboxes would be subject to lighter regulation regarding cash reserves, financial reporting, and foreign currency controls.

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A chief expert at the Center for Strategic Research in Moscow, Olga Shepeleva, said that the government should have passed the law soon to represent the government’s system on developing Russia’s digital economy. Still, there were concerns that such a law would excessively skew the power balance in favor of the executive branch.