Crypto Dispute: Russian Bank and Government in Disagreement

The Russian government is moving toward regulating the use of cryptocurrencies in the country. According to Bloomberg, Finance Minister Anton Siluanov in a letter to Prime Minister Mikhail Mishustin, says that legalizing crypto would help eliminate grey market crypto trading. He considers that it would help the government monitor the industry. Siluanov also states that allowing trade would possibly lead to a surge in foreign investors.

The government later published an outline of how it plans to regulate the market. Furthermore, the Deputy Finance Minister of Russia, Alexey Moiseev said:

We need to create clear and transparent rules for the participation of citizens and businesses in the financial instruments of the crypto market. Clear regulation excludes the possibility of a parallel financial system appearing.

However, Russia’s central bank opposes this move citing several reasons. Firstly, the bank believes that cryptocurrencies appear to be similar to the structure and functioning of a pyramid scheme. Additionally, it stated that crypto could be used for illegal transactions.

“The approaches proposed by the government do not yet allow neutralizing the risks that we see, and at the same time they create new threats,” says Bank of Russia Governor Elvira Nabiullina.

Russia has been witnessing a foreign investment slump since the Kremlin annexed Crimea from Ukraine in 2014. “Legalizing cryptocurrency could help Russia’s investment case, which suffers from a lack of venture capital due to the conflict with the West,” says Andrey Mikhailishin.  Mikhailishin is the chief executive of Joys Digital payment service in Moscow. He believes that transparency could attract $3.5 billion in investment in 2022. President Vladimir Putin in January called on the authorities to reach a compromise.