Russia Readies Road Map For Cryptocurrency Regulation

Russian internet © Pavel Ignatov Shutterstock 2012

Russian authorities ready plan for tough cryptocurrencies restrictions, but not the outright ban favoured by central bank

Russia continues to explore its future relationship with cryptocurrencies and crypto mining, after a significant intervention last week by the country’s central bank.

Like the UK, Russia has for years argued against cryptocurrencies, saying they could be used in money laundering or to finance terrorism.

That said, Russia gave cryptocurrencies legal status in 2020 but banned their use as a means of payment.

Russian flag © esfera Shutterstock 2012

To ban or not to ban?

But lately the country’s attitude seemed to be hardening, after Russia’s regulator in December reportedly came out in favour of a total ban on cryptocurrencies, which hit the value of bitcoin at the time.

Then last week Russia’s central bank proposed completely banning the use and mining of cryptocurrencies on Russian territory, citing threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty.

President Vladimir Putin has reportedly asked for a consensus to be found by Russian officials.

Now Reuters has seen a document from Russian authorities which shows they have drawn up a ‘road map’ that envisages restrictions on cryptocurrencies.

Significantly however, it is not a complete ban as advocated by the central bank.

It comes after local politicians reportedly pressed for a change of position on cryptocurrencies by the central bank.

Road map

According to Reuters, working group participants include the finance, economy, digital and interior ministries, the FSB security service, and the central bank.

Deputy Prime Minister Dmitry Chernyshenko has reportedly signed the road map, according to the document.

A representative for Chernyshenko confirmed the document’s authenticity.

“We note that the points of the road map were supported in full by all agencies, with the exception of the Bank of Russia,” the document said.

The central bank said it was familiar with the draft of the road map.

“We believe it is necessary to prepare a federal law, establishing a ban on the issue and circulation on Russian territory of private digital currencies and also to determine liability for violating this ban,” the central bank was quoted by Reuters as saying in a statement.

It seems that the working group’s proposal would allow for the buying and selling of cryptocurrencies to be provided exclusively by Russian banking organisations.

It also reportedly proposes creating procedures to block foreign crypto exchanges from offering services to users in Russia but suggests that foreign platforms which obtain an appropriate licence would be permitted to operate.

China ban

Russia’s effort here mirror similar movements in other countries.

China began a crackdown on Bitcoin and other cryptocurrencies in June 2021, which – like many other governments – it considers dangerous to financial stability and a means of laundering money.

Then last September China declared all transactions in the currency to be illegal.

Last month the Bank of England’s deputy governor Sir Jon Cunliffe warned about risks associated with cryptocurrencies, and urged the creation of a crypto regulatory framework.