Russia Crypto Showdown Escalates As Finance Ministry Submits Bill To Parliament

Russia’s Ministry of Finance has moved forward with its plan to regulate the crypto sector by introducing a cryptocurrency bill to parliament, amid its public clash with the country’s central bank regarding how to deal with the asset class.

Russia’s Finance Ministry Introduces Crypto Bill

Russia’s Ministry of Finance has submitted a draft crypto bill to parliament despite the central bank’s objection to regulating the burgeoning industry. In a Monday press release, the Finance Ministry indicated that the proposed bill — which was submitted on Feb. 18 — would allow Russian citizens to invest in digital assets such as bitcoin, but they cannot use them to pay for goods and services.

“The use of digital currencies as a means of payment in the Russian Federation will continue to be prohibited. In the framework of the proposed regulation digital currencies are considered only as a tool for investment,” the announcement said.

It went on to emphasize that the proposal does not look to give cryptocurrencies legal tender status. Moreover, crypto exchanges and OTC desks will be required to satisfy certain criteria to get a license and be registered with the government.

The government of Russia and the central bank have been split on how to approach cryptocurrencies in the country for a long time now. Unlike the Finance Ministry, the Bank of Russia is insisting on a total ban on crypto mining and trading, citing risks to the country’s financial stability and volatility concerns.

In the statement, the Ministry of Finance stated that the concerns of the central bank will “be considered in the further work on this bill where they don’t contradict the Ministry of Finance approach.”

Russians Will Have To Undergo Online Tests Before They Can Trade Crypto

The legislation introduced by the Finance Ministry also indicates that crypto transactions must only be conducted via bank accounts. In addition, users must go through know your customer (KYC) checks with both cryptocurrency platforms and banks.

Exchange operators are also required to inform customers of the risks related to crypto investing. Retail investors will have to pass an exam that tests their knowledge about cryptocurrencies and associated risks. Those who pass the online tests can invest up to 600,000 Russian rubles a year in crypto, while those who don’t can only allocate 50,000 rubles a year, the press release said. Businesses and qualified investors won’t have any yearly limits.

Russia is currently the world’s third-most-popular nation for crypto mining, behind Kazakhstan and the U.S. The Finance Ministry’s bill establishes a formal definition of crypto mining and said that the sector will be supervised by the selected government agencies.

Speaking during an interview on Monday, Russia’s Finance Minister Anton Siluanov revealed the ministry is hopeful that the proposed legislation will take effect by the end of this year.