The Minister of Finance of Russia proposed a law regulating cryptocurrency in the country. Investors would be clearly identified and would need to pass a test before investing.
The Ministry of Finance of Russia on February 18 submitted its draft law about the regulation of cryptocurrency in the country.
The proposed law aims at creating a legal market for digital currencies in Russia by setting up the rules of use and circulation.
In the bill, the use of cryptocurrency as a digital money for transactions will remain prohibited, the ministry stated on Monday.
Crypto would as a consequence become only as an investment solution only. It would therefore be a stock exchange asset with no use into real economy other than by converting digital currency into a traditional one like the Russian ruble.
Moreover, the ministry intends to have financial investors perform an online test before buying and selling any cryptocurrency. It would assess the investor’s knowledge on digital currency investment and awareness of risks faced by putting money into cryptos.
No more than $7,500 in cryptocurrency for individual investors
If individuals pass the test, they would be able to invest up to 600,000 rubles annually (US$7,558). However if they fail, annual investment would be capped at 50,000 rubles ($630).
But even if individuals are successful with the test, the allowed amount of investment still appears greatly restricted. The price of a Bitcoin hasn’t gone below 600,000 rubles since April 2020, which has been worth between 4 and 8 times as much since then.
Any operations would be conditioned to the identification of the individual. Deposit and withdrawal of digital currencies would also need to go through regular and nominal bank accounts.
While anonymity and decentralization are pillars of digital currency investors, Russia argues nominal bank accounts will protect investors’ assets. Exchanges would need to be recorded in a registry managed by operators. Similar to trade on stock exchange, suspicious transactions would need to be reported by operators to financial authorities.
For now, foreign cryptocurrency exchanges will be expected to register in Russia to obtain a license if the law is passed.
Late last week, the Bank of Russia proposed its much tougher legislation. Platforms of cryptocurrency management services and mining were made illegal. Earlier in January the Central Bank report recommended to ban cryptocurrencies arguing they are used to escape anti-money laundering laws or finance terrorism.
But the president of Russia Vladimir Putin opposed to a ban of cryptocurrency as blockchain technology can also appear as an economic opportunity. Digital mining requires powerful computers and important supply of electricity, of which Russia is an important producer.