According to media sources in Russia, advanced plans have been set in motion to consider the enactment of new laws that will regulate cryptocurrency operations in the country. Citing comments from Anatoly Aksakov, the chair of the financial markets committee of the State Duma, the Russian Legislature is set to introduce laws that will guide the framework of cryptocurrency creation and exchange.
This comes after months of uncertainty with regard to the adoption of any form of cryptocurrency regulation by the Russian government. Earlier in the year, Russian lawmakers were unable to come to a consensus on cryptocurrency regulations and the move was postponed to 2018.
Originally scheduled to be finalized in October, the focus of the deliberation shifted from cryptocurrencies to blockchain technology. The National Council for Financial Stability held a closed-door session with top Government officials where it was decided that Bitcoin and other cryptocoins will not be recognized in Russia. This effectively meant that Bitcoin settlements where not legalized within the Russian financial market. In the aftermath of the meeting, the general consensus was that Russia would focus its attention on working out modalities to legalize blockchain technology.
The Issues at Stake
From the outside, there seems to have always been a degree of ambivalence with respect to Russia’s position on Bitcoin and cryptocurrencies in general. Russia isn’t alone in this as many countries are yet to develop clear regulatory guidelines for the crypto market. Russian Deputy Finance Minister, Alexei Moiseyev stated in September 2017 that many countries adopt different approaches to the cryptocurrency situation. According to him, it would be in Russia’s best interest to carefully study the market in order to develop a regulatory framework that benefits the country.
Officials at the Russian Central Bank have been unanimous in saying that cryptocurrencies shouldn’t be classified as substitutes fiat currency. This is due to the fact that according to Elvira Nabiullina, such a move negatively impacts the country’s ability to control foreign cash flow. She has also gone further to echo a sentiment that is common with many Russian Government officials with regard to cryptocurrency regulation which is that all positions need to be considered.
Earlier in the year, the Russian Central Bank issued warning concerning cryptocurrency ICOs and exchange services. Though such a move isn’t in the same category as a blanket ban like in the case of the Chinese Government but it was seen at the time as an indicator of Russia’s feelings towards the fledging crypto market.
Going Back and Forth
One thing that has remained constant during the many months of Government deliberation over the cryptocurrency regulation plan has been the inability to come to a consensus. There has been a lot of going back and forth on many key issues being considered. This delay in reaching a consensus has caused delays in the timetable set out for the creation and adoption of cryptocurrency regulatory guidelines. There have been many deadlocks and postponements throughout the year that even with this current development, the passing of any meaningful law on the matter will occur no earlier than 2018.
One of the thorny issues that have resulted in the lack of consensus lies in the classification of digital currencies. This problem isn’t peculiar to Russia alone as there are many arguments and counterarguments on the issue in different countries. The US Securities and Exchange Commission (SEC) issued a ruling which basically classified some tokens as securities. This meant that some ICO campaigns were issuing tokens which constituted securities and as such, were under the purview of securities law. Even this ruling didn’t do justice to the matter and the cryptocurrency token utilities – tokenized securities dichotomy still continues to create a lot of controversy.
Another problem that has stalled the progress of the passing of any laws regulating cryptocurrency has been the decision to develop a State-owned cryptocurrency. Many regulators see it as a bad move saying the Russian economy isn’t ripe for a cryptocurrency. There have been a lot of discussions on the matter with many being skeptical about the idea. Many of those not in support of the move also point to the fact that no other country has yet developed a national cryptocurrency which in their opinion is a damning indictment of the feasibility of such a move.
There is a fair bit of optimism in the possibility of this being the start of the process of adopting clearly defined regulations to govern the Russian crypto market. Russian President Vladimir Putin has already ordered the legislature to hasten their efforts in creating a proper framework for blockchains and Initial Coin Offerings. News sources from the Kremlin have reported that President Putin has issued clear directives over the work he expects the legislators and the financial regulators to carry out in the next few months.