Russia has done a complete turnaround from its earlier stance of being against cryptocurrencies.
The Russian Ministry of Finance recently drafted a bill that focuses on acknowledging the status of cryptocurrencies as “security in electronic form,” specifically dubbing it as a “digital financial asset.”
However, the ministry was quick to mention in the bill that cryptocurrency is not recognized as legal tender, which means that, while it remains a security asset in the perspective of the Russian government, it cannot be used for authorized modes of payment within the country.
This view towards cryptocurrency goes right in line with almost all of the other governments in the world except for Japan, which actually accepts Bitcoin and other cryptocurrencies as “means of payment that is a legal currency.”
Nevertheless, the recognition by the government is being welcomed by the local cryptocurrency community as it is in stark contrast to Russia’s initial approach towards cryptocurrency.
In 2014, before Bitcoin and other cryptocurrencies had become popular, Russia’s central bank had called the mode of transaction “quasi-money” and had stated that it is used for money laundering and other criminal activities.
Therefore, this current move is being lauded by local stakeholders in cryptocurrency since it helps establish the financial segment’s authenticity as being something more than fuel for illicit activities.
What does the drafted bill say?
Along with mentioning the legal term for cryptocurrencies, the drafted bill also covers initial coin offerings (ICOs), a fundraising and public offering mechanism using cryptocurrencies that has grown immensely popular since last year.
Future regulations are proposed for the ICOs, one of them being the restriction on individual investors interested in these offerings. The bill states that anyone who is not registered as a qualified investor will not be able to invest more than 50,000 Rubles (or around $900) in an ICO.
Coming to the legal usage of cryptocurrencies, the bill proposes that trading of cryptocurrencies is allowed only on licensed exchanges.
It is also mentioned that bitcoin mining will be considered as an “entrepreneurial activity” because anyone performing mining services gets paid in return. This could also mean that such individuals might need to register with the government as self-employed professionals.
The bill will need to go through the Russian parliament before it could be implemented into law, and it is very likely that it will have further amendments before that could be done.
The possible effects of this move
While this could be seen as being a beneficial move that establishes cryptocurrencies as a security asset in Russia, at the very least, it might still be opposed by those segments of the cryptocurrency community that are not particularly fond of any government’s involvement in their safe space.
However, with the growing popularity of cryptocurrencies, seeing such regulations and updates is becoming inevitable. This draft bill is one of the many updates in the future where these actions might become an everyday activity, which is why the cryptocurrency world needs to brace itself and come to a consensus on how to move forward in the midst of such actions, as this is just the cost of growing out of a niche sector and evolving into a new industry on its own.