Russia: Government and Biggest Bank See Cryptos as “Currency Analogue”; publish a bill soon

After months of speculation and adversarial debate, Russia surprised the cryptocurrency industry by agreeing to recognize Bitcoin as a currency. This comes after the Russian government and central bank reached consensus on cryptocurrency regulation, Kommersant reported Tuesday.

“Currency Analog”

The government and the central bank of Russia will now work together on a bill that is expected to be launched on February 18 and will recognize crypto as an “analogue of currencies” that are standard like the ruble rather than digital financial assets.

A document draft in this regard, it was noted that the legislation would aim to integrate the circulation and use of cryptocurrencies into the current financial system of the country. This would mean the complete identification of each cryptocurrency through the banking system or approved intermediaries so that they receive legal status.

The report also noted that although owning cryptocurrencies and using them for transactions is not currently prohibited in Russia, they must be done through a “digital currency exchange organizer” or a licensed peer-to-peer exchange in the country.

Restrictions in place

He further revealed that transactions worth more than 600,000 rubles, or about $8,016, should be reported or will be considered a criminal act. Additionally, those who engage in illegal crypto transactions through alternative channels will also be subject to fines.

According to the document, the regulatory regime will aim to protect Russian citizens from the risks posed by crypto assets, as well as establish a licensing mechanism for cryptocurrency providers to ensure transparency.

While it is not yet clear what these new regulations would mean for all parties involved, including investors and traders, it is a welcome step for a country that has previously expressed skepticism about the asset class. Just last month, Russia’s central bank called for a nationwide ban on trading and mining cryptocurrencies due to their volatility and speculative nature.

He then locked horns with the Russian Ministry of Finance, which argued that regulating and taxing crypto rather than outright banning it would be an appropriate choice, as it would ensure illegal use was minimized and also increase Treasury tax revenue. The Ministry of Finance had also sent the government last month a draft regulatory framework for crypto assets.

A leak government analysis had even discovered that if the Russian government decided to tax the $214 billion worth of crypto owned by its citizens, it could collect between 146 billion and 1 trillion rubles in crypto tax revenue.

Cryptocurrency mining has also been a point of contention in the country, especially since many miners migrated to Russia after China banned all such operations. While President Vladamir Putin has previously expressed support for regulating the industry, a prominent Russian lawmaker recently proposed a personal income tax rate of at least 15% for crypto miners.