After years of uncertainty about its cryptocurrency regulation, Russia is further confusing its proposed crypto law as the country’s central bank made yet another statement on the issue.
According to a legal executive at the Bank of Russia, the country’s major but still unfinalized cryptocurrency legislation — a bill “On Digital Financial Assets” — will ban the issuance and circulation of cryptocurrencies.
Alexey Guznov, head of the legal department at Russia’s central bank, revealed the news in an interview with local news agency Interfax on March 16.
Issuance and circulation of crypto in the country poses an “unjustified risk”
Although the original bill “On Digital Financial Assets” stipulated that cryptocurrency trading would be allowed in Russia, the amended document will apparently prohibit nearly everything about crypto except holding, according to Guznov’s latest remarks.
The official said that the upcoming law will explicitly prohibit the issuance and circulation of cryptocurrency and would introduce penalties for violating this law. Guznov argued:
“In terms of the functioning of the financial system and consumer protection system, legalization of the issuance and facilitating the circulation of cryptocurrencies is an unjustified risk. As such, the bill explicitly prohibits emission and organization of cryptocurrency circulation, introducing legal liability for violating these rules.”
Russia’s central bank would unlikely be able to regulate Bitcoin transactions
Besides claiming that the crypto bill would ban Russian financial institutions from issuing digital assets, Guznov provided little clarity about the upcoming bill. When asked whether the Bank of Russia wants to ban residents from converting crypto into local fiat currency, the Russian ruble, or a foreign currency, Guznov did not provide a direct answer.
Instead, the exec reiterated his stance that the central bank opposes institutions issuing cryptocurrencies, adding that the bank would be unable to impose certain limits on transactions in Bitcoin (BTC):
“If a person who owns, for example, Bitcoins, completes a transaction in a jurisdiction that does not prohibit this, we are unlikely to be able to regulate that.”
Russia’s crypto law was first introduced in January 2018
The latest remarks about Russia’s upcoming cryptocurrency regulation come after years of uncertainty as well as multiple delays in providing any regulatory clarity. First introduced in January 2018, President Vladimir Putin has ordered the adoption of the bill “On Digital Financial Assets” twice, but the legislation is still unfinalized to date.
While Russia’s Ministry of Finance has been trying to legalize cryptocurrencies in the country, the central bank has apparently been fighting to ban Russians from legally using crypto at all.
In February 2020, the Bank of Russia issued a whole set of rules for suspicious transactions, categorizing any crypto-related transaction as a potential money laundering risk.
While prohibiting local entities from issuing their own digital assets, the central bank has been considering the emission of its own digital currency. In December 2019, the bank’s head Elvira Nabiullina said that the institution was exploring the possibility of issuing a digital ruble.