Russian Govt and Central Bank Clash over Crypto Rules
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Russian Govt and Central Bank Clash over Crypto Rules

7 months ago

The Bank of Russia is continuing to push for an outright ban on digital assets, but the finance ministry favors regulation that would allow consumers to make investments.

Russian Govt and Central Bank Clash over Crypto Rules

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Russia's ministry of finance is heading for a showdown with the country's central bank over cryptocurrencies.

Government officials still want to prohibit digital assets from being used as a means of payment, but plan to soften their stance in other ways.

Citizens who pass an online test and prove they have a satisfactory level of knowledge about cryptocurrencies and their dangers would be able to invest up to $7,500 a year — but this limit would fall to just $625 if a test is failed.

International crypto exchanges would also be allowed to operate as long as they obtained a license, performed Know Your Customer checks, and had financial safeguards in place.

But all of this contradicts the Bank of Russia, which is preparing bills that would ban private digital currencies from circulating within the country — and fine those who break the rules.

According to the TASS news agency, both organizations have held talks in an attempt to reconcile their differences and find some middle ground, but no "significant progress" has been made.

In a sign that the Ministry of Finance intends to push ahead with its approach, a news release said:

"The proposals received from the Bank of Russia will be taken into account in further work on the draft law insofar as it does not contradict the approaches of the Russian Ministry of Finance."

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A Change of Tone

Russia has become the latest country to shift its stance on cryptocurrencies and favor regulation over an outright ban.

India recently put its own plans to outlaw digital assets on the backburner — and speaking in parliament, finance minister Nirmala Sitharaman said profits from trading cryptocurrencies would instead be taxed at 30%. Separately, New Delhi plans to launch a digital rupee by the end of next year.

There are a number of factors here. Regulation can help legitimize the industry, boosting tax revenues and leading to job creation.

A document released by Russia's government earlier this month also expressed fears that a lack of regulation would mean law enforcement agencies are unable to "respond effectively" to offenses and crimes committed using digital assets — resulting in the creation of a shadow economy and potentially allowing crypto fraudsters to act with impunity.
At the time, official estimates suggested that more than 12 million crypto wallets have been established in Russia, with a collective value of two trillion rubles.

And there's another elephant in the room that needs to be discussed. Tensions between Russia and the West are starting to reach boiling point, with U.S. officials claiming that the Kremlin is on the brink of invading Ukraine. Washington has threatened to impose punishing economic sanctions if an assault takes place, and it's possible this has spurred Moscow to look at Bitcoin from a new perspective.

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