The Russian government and the country’s central bank have reached an agreement to draft legislation or amend existing laws recognising crypto as a form of currency.
The agreement is a significant reversal after the Bank of Russia last month proposed banning miners and several other crypto operations over concerns that they could endanger the country’s financial system.
It is understood cryptos are to be classified as an “analogue of currencies” and not as financial digital assets. Legislation will reportedly be drawn up no later than Feb. 18.
Russia’s regulation will seek to integrate a mechanism for the circulation of digital currencies into the country’s financial system while ensuring control over credit institutions’ cash flows, a rough translation of an accompanying draft document reads.
Crypto’s use as currency will only be possible following proper identity checks via the country’s banking system or licensed intermediaries, while operations exceeding 600,000 rubles ($8,016) must be declared.
Transacting outside those proposed legal parameters will be considered a criminal offense, and fines are expected to be introduced for the illegal acceptance of cryptos as a means of payment.
Officials also said the regulation would ensure the protection of citizens’ rights under a licensing regime aimed at cryptocurrency providers. Providers will need to have “financial airbags” in terms of liquidity and adequate capital.
There are additional plans to introduce an “obligation” for market participants to educate Russia’s citizens regarding the risks associated with digital assets.
Several Russian regulators and lawmakers including the Ministry of Finance, the Federal Security Service, the Ministry of Internal Affairs, the Federal Tax Service and others were involved in the decision-making process.
