The Russian Ministry of Finance has prepared and submitted a new bill to expand crypto regulations to the government. The law “On Digital Currency” is aimed at introducing rules for investment in cryptocurrencies and at the same time consolidating the ban on their use in payments.
Last Friday the Ministry of Finance of the Russian federation presented legislative proposals to the government, which led to a debate on the regulation of cryptocurrencies in Russia, as it collided with the central bank’s demand for a total ban on cryptocurrencies.
The Bank of Russia has argued that cryptocurrency trading and mining should be banned as it threatens financial stability. On the other side of the argument, the Russian Ministry of Finance suggests that the regulation of cryptocurrencies will allow them as an investment tool but not as legal tender.
The Russian Finance Ministry’s draft law aims to create a legal market for digital currencies, it said on Monday.
One proposal is for transactions involving the purchase or sale of cryptocurrency that require customer identification, a move that can diminish one of cryptocurrency’s main selling points: its anonymity.
Other proposals from the Russian Ministry of Finance include the issuance of licenses for foreign cryptocurrency exchanges in Russia and financial education tests that determine how much people are allowed to invest.
According to the Russian Ministry of Finance, citizens who successfully pass the tests will be able to invest up to 600,000 rubles ($7,853) in digital currencies each year. Those that fail would have an investment limit set at 50,000 rubles a year.
The central bank also claimed that cryptocurrency mining absorbs a lot of energy and warned about inefficient power consumption and the environmental impact of mining. At the same time, the Ministry of Finance prefers to allow mining on the basis of taxes.
The legislation of the Minfin (Ministry of Finance) is based on its normative concept, approved by the Executive Branch earlier this month. Most other relevant regulators and government bodies have also sided with his view that the industry needs regulation, not a blanket ban.
According to the new law, the use of cryptocurrencies as a means of payment, one of the few common positions with the Central Bank of Russia, will continue to be prohibited and will be considered primarily as an investment tool. The ministry confirmed that it received the Bank of Russia’s legislative amendments, noting that those that do not contradict its approach will be considered.
Minfin has also thought about the status of crypto mining, defining it as an activity aimed at obtaining cryptocurrencies. While the Bank of Russia has suggested it should be banned, officials in Moscow and Russia’s energy-rich regions have called for it to be recognized as an economic activity that would allow the government to tap into its profits.
According to a recent report by Moscow-based news outlet The Bell, data collected from Russian authorities showed that the country could earn 1 trillion rubles ($13 billion) every year by taxing cryptocurrency transactions.
The global crypto market capitalization was $1.87 trillion in 2021, with a 12% share coming from the Russians. The report further added that Russians form 10% of cryptocurrency users or 12 million people who use foreign cryptocurrency exchanges, the report added.
Earlier, Bloomberg reported that the Kremlin estimated the Russian cryptocurrency market to be worth more than 16.5 trillion rubles ($214 billion), which represents around 12% of the total value of the global cryptocurrency market capitalization, a figure significantly higher than the 5,000 million dollars proposed by the central bank.