Legalization or ban: why the Ministry of Finance and the Central Bank disagreed about the cryptocurrency market

The Central Bank has prepared draft laws on the introduction of severe restrictions on the cryptocurrency market in Russia.

RIA Novosti writes about this, citing a source.

According to the agency, the Central Bank proposes to ban the issuance and circulation of private digital currencies in the country, and to impose administrative fines for failure to comply with these requirements.

For individuals, the amount can range from 300 thousand to 500 thousand rubles, and for legal entities - from 700 thousand to 1 million rubles.

In addition, the Bank of Russia considers it necessary to establish a ban on the dissemination of information about the organization of the issuance and circulation of cryptocurrencies.

At the same time, it is proposed to ban banks and financial market participants from owning private digital money.

The Central Bank also advocates the introduction of liability in case of violation of the ban on accepting payments in private digital currency.

In this case, the fine for individuals can range from 30,000 to 50,000 rubles, and for legal entities - from 700,000 to 1 million rubles.

Moreover, the Central Bank proposes to retain the authority to initiate and consider cases of administrative offenses if market participants do not comply with the requirements of the regulator.

As Elvira Nabiullina, Chairman of the Bank of Russia, explained earlier, the Central Bank sees significant risks in the spread of cryptocurrencies.

“We see significant threats in the expansion, in the development of the cryptocurrency market, both for the well-being of citizens, and for monetary circulation, for financial stability.

We immediately see risks with the easy possibility of using cryptocurrencies for illegal operations, ”Nabiullina said at a press conference on February 11.

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• © Photo provided by the press service of the lower house of parliament

At the same time, the Ministry of Finance of Russia adheres to the opposite point of view.

So, according to the head of the department Anton Siluanov, the Ministry of Finance advocates the regulation of the cryptocurrency market and the legalization of digital assets in the country.

“Cryptocurrency is a product of the Internet.

And if we want to ban cryptocurrencies, then we need to ban the Internet… We believe that legalization is always better than a ban that can be easily bypassed,” the minister said on air on the Russia 24 TV channel.

According to him, in order to protect the rights of citizens, the Ministry of Finance proposes to divide investors into qualified and unqualified.

In addition, the department advocates the introduction of mandatory identification of buyers of cryptocurrencies.

“Today there are people who just want to make money by investing their savings in cryptocurrency, and there are people who want to do some gray or dark operations using cryptocurrency.

So, the identification of people and operations will allow us to clearly identify where the white field is, where the gray one is, ”the minister emphasized.

At the moment, the Ministry of Finance is discussing the issue of taxation of crypto assets in Russia and at the same time studying the experience of other countries, Siluanov added.

In his opinion, the current disagreements between the ministry and the Central Bank will eventually be resolved, and the bill on the regulation of digital currencies can be adopted as early as 2022.

“We have to go through several stages: after all, to make an agreed decision within the government and the Central Bank, to submit a bill to parliament.

I hope that in the best case it can be accepted in the spring session.

If there are wider debates on this bill, I hope that by the end of the year we could adopt this bill,” said Anton Siluanov.

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• © Federation Council of Russia

Recall that the Central Bank announced prohibitive measures against the cryptocurrency market at the end of January.

The tough position of the regulator did not find support in the government and the Ministry of Finance.

Against this background, during a meeting on January 26, Russian President Vladimir Putin instructed the Cabinet, together with the Central Bank, to still come to a consensus.

As the president stressed, the Bank of Russia is making the necessary efforts to "introduce the latest technologies in this area of ​​activity."

At the same time, the head of state drew attention to the problems identified by the regulator.

“According to experts of the Central Bank, the expansion of this type of activity carries certain risks, and first of all for the citizens of the country, given the high volatility and some other components of this topic.

Although, of course, we also have certain competitive advantages here, especially in the so-called mining.

I mean a surplus of electricity and well-trained personnel available in the country,” Putin said.

On February 8, the Russian government approved the concept of legislative regulation of cryptocurrencies.

According to the document, it is planned to introduce a mechanism for the circulation of digital assets in the country's financial system and ensure control over cash flows.

It is also planned to approve the requirements for licensing cryptocurrency exchanges, and market participants will need to inform citizens about the increased risks of transactions with electronic money.

Topic for discussion

Note that today Russia is one of the leading players in the global cryptocurrency market.

According to some reports, the volume of transactions with digital assets made by Russians annually is about $5 billion, and the share of Russians on some crypto exchanges exceeds 14%.

At the moment, citizens of the country have opened more than 12 million cryptocurrency wallets with a total amount of funds in the amount of 2 trillion rubles.

In addition, in August 2021, Russia ranked third in the world in terms of bitcoin mining.

“Today, operations with cryptocurrencies are not prohibited in Russia, but the industry is not taxed, which means it is in a gray zone.

Therefore, of course, the government is interested in bringing this sector out of the shadows and getting a new taxable base, ”said Yuri Pripachkin, president of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (RAKIB), in an interview with RT.

In his opinion, it is possible to regulate operations with cryptocurrencies by analogy with the stock market.

Thus, authorized banks will be able to conduct transactions, and customers will need to go through the identification procedure, create a personal account and open a crypto wallet.

At the same time, the difference between the price of buying and selling digital currency will be taxed.

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• © Kirill Zykov

The Ministry of Finance also advocates the legalization of mining in Russia.

According to Anton Siluanov, this type of economic activity must be assigned its own code.

In addition to receiving additional funds in the budget, such a decision will contribute to the development of technologies in the country, Janis Kivkulis, a leading analyst at EXANTE, believes.

“Russia, due to the climate, is a very convenient country for mining.

With a reasonable approach to the legalization of the industry, mining can be a good item to replenish the budget, contributing to the development of the technological sphere of the economy.

In addition, mining can be used not only for the extraction of cryptocurrencies, but also for heating buildings, greenhouses or other premises.

In such a cold country like Russia, this could be a sought-after function, ”the specialist added.

According to Yuri Pripachkin, today the State Duma has already created a working group to prepare legislation to regulate cryptocurrencies.

According to the expert, the initiatives proposed by the Ministry of Finance allow minimizing risks for citizens and the country's financial system.

Against this background, a compromise between the ministry and the Central Bank can be reached in the near future, the specialist does not exclude.

“A fundamental decision should be made within a month, maybe even before the end of February.

After that, a bill will be prepared, which, of course, will take some time.

Now there are discussions about the fact that from January 1, 2023, the industry will fully work in the legal field, ”Pripachkin believes.