Russia has reconsidered its decision to prohibit cryptocurrencies
The Central Bank of Russia has temporarily reversed its decision to prohibit the use of cryptocurrencies in the country. The Bank is working with the government to draft legislation to regulate cryptocurrencies. Along the process, the authorities developed a plan for Russians to use cryptocurrency. In other words, authorities seek complete control over cryptocurrency transactions. However, mining is not addressed in the legislation.
“Russia has an edge in the field of cryptocurrency mining owing to the experts in the crypto sector and a surplus of power”, according to President Vladimir Putin at a meeting with the government. The Central Bank has its take on this: the regulator feels that actions involving such highly volatile assets involve significant risks, especially for citizens, as highlighted by the president. Putin stated that the Central Bank is making efforts to implement cutting-edge technologies in the crypto industry. The President requested that the regulator and the government reach an agreement on the regulation of cryptocurrencies in Russia soon.
On January 20, the Central Bank released a document outlining the dangers posed to Russian residents, financial stability, and economic security as a result of the rise of cryptocurrencies. The regulator suggested a ban on mining, issue, circulation, and exchange of such assets, including bitcoin, by any Russian crypto-exchanges, and P2P platforms. Moreover, they suggested making violators of the prohibition accountable, although no specific measure has been created. Meanwhile, the Central Bank emphasized that holding of crypto assets is not intended to be prohibited.
In February 2022, the parties reached the agreement that this field requires regulation and fully stringent supervision, rather than a ban. Although the Central Bank of Russia regarded it as important to entirely prohibit cryptocurrencies in Russia in January. This resulted in a dramatic drop in the value of bitcoin and other cryptocurrencies. Now, the Bank of Russia and the Russian government will work together to draft legislation that would recognize virtual tokens as equivalents of traditional fiat currencies rather than digital financial assets. However, the law governing the latter has been in existence in Russia since January 2021.
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Valentyna Bereza, Team bit4you.