According to the ministry’s statement, the Russian Finance Ministry has submitted a bill “On Digital Currency” to the government to regulate crypto. The bill was developed on the basis of the Russian government’s approval of the concept for the legislative regulation of the circulation of digital currencies.
In Brief:
- License specifications for foreign and other crypto exchanges in Russia make the content of the bill.
- The investment will require customer identification while making it illegal for the banks to issue or transact in the same.
The use of cryptocurrencies as a payment instrument will remain prohibited in Russia, while digital currencies are regarded solely as investment instruments, which was also the rationale behind drafting the legislation.
As reported earlier, the Russian finance ministry considered the central bank’s proposals. According to their proposal, foreign cryptocurrency exchanges have to go through the licensing regime. Not only that, a special register of exchanges and exchange offices in Russia will be established to conduct operations related to organizing the circulation of digital currencies.
Exchanges are required to separate in the information system the digital currency owned by them from the digital currency of trading participants.
The stipulations on the register maintenance, inter alia, are regarding:
- Corporate governance
- Reporting & Information storage
- Internal Control and Audit
- Risk Management System
The Russian Government has previously clarified the identification requirement for citizens who wish to transact in cryptocurrencies. The bill specifies that purchasing and selling crypto will be legal only through a bank account, and it is proposed that both crypto exchanges and banks implement Know Your Client (KYC) procedures and notify Rosfinmonitoring of any suspicious transactions.
Additionally, a nominal account mode is introduced for the safety of clients’ funds for crypto exchanges, on which customers’ funds will be located. The draft law also provides for a mechanism for informing the tax authorities with the information necessary for miners to exercise control and supervisory functions.
The bill also specifies that issuing digital assets and facilitating their circulation is illegal, and banks and other financial institutions should not be permitted to hold or transact in cryptocurrency.
In the bill, digital mining is defined as an activity aimed at obtaining cryptocurrency. The bill also suggests a mechanism for providing tax authorities with the information they need to perform control and supervisory functions.
