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Russia fudges on banning cryptocurrency

A meeting of the interdepartmental working group on cryptocurrency turnover risk assessment at the State Duma was scheduled for December 15.

It is expected that consensus will be reached on how to develop a state policy in the scope of regulation of cryptocurrency. Experts will present two concepts of regulation during the meeting. And both of them are licensing.

The first concept involves the introduction of targeted amendments to existing legislation. That is, the current law, which affects this area, will add norms for regulation of mining (the production process of cryptocurrency), taxable turnover of cryptocurrency, control over the activity of trading platforms, etc.

The second concept involves the development of a separate federal law on cryptocurrency. It can be modelled on the Model Statute on the Basics of Internet Regulation (enacted on 16 May 2011 in St. Petersburg). The project serves to define cryptocurrency, trading platforms and their participants. The Model Statute should provide a legal framework for future legislative decisions.

Russia may become the first country in the world that has established the legal status of cryptocurrency at the federal level. The status of cryptocurrency and its regulation vary in different countries. For example, cryptocurrency exchange operations for money are equal to exchange operations between currency of different countries in some states of the US, and companies involved in such exchange should be recorded as financial services providers. The Financial Service Department issued a special legal document called BitLicense, which defined regulatory conditions of cryptocurrency market. At the same time, there is no single federal law on cryptocurrency in the US now, which would be compulsory for all states.

There are grounds for believing that Russia is fudging on the prohibitionist paradigm. The sentiment was completely different at the beginning of 2016. Then the Ministry of Finance of the Russian Federation has developed amendments to the Code of administrative violations and the law “On the Central Bank”, suggesting sanctions for businesses for issuance and turnover of cryptocurrency. According to the amendments, companies, which are known to be violating the law, had to pay 3-5 million rubles fine or their activities had to be suspended for up to 90 days.

At the same time the ministry has prepared a bill that introduces a criminal responsibility for issuing, purchasing and selling cryptocurrency, also referred to as quasi-cash. It was proposed to impose offenders up to 500 thousand rubles fine or up to 4 years imprisonment. For members of an organized group – from 500 thousand to 1 million rubles fine or up to 6 years of imprisonment. For top managers of banks, insurance companies and other financial institutions and professional participant of securities markets – from 1 million to 2.5 million rubles and the maximum punishment is 7 years of imprisonment.


  • November 30, 2016 6:06 PM MSK