Russian residents will be limited to conducting digital currency transactions through licensed operators, a restriction that in effect renders peer-to-peer trades illegal, according to the Ministry of Finance's proposed bill on regulating cryptocurrencies. Only certified cryptocurrency wallets will be allowed.
While the document, titled "On the Digital Currency," hasn’t been published on the parliament website, a legal expert who obtained the draft shared it with CoinDesk.
The bill defines digital currency as property and electronic data stored in an information system that can be used as payment while not being a legal tender in the Russian federation, or as an investment tool without any entity backing it.
Digital currency operators that facilitate transactions must maintain annual financial reporting, such as traditional businesses as well as satisfying other criteria. Notably, committed felons cannot chair digital currency operators. That includes people charged with terrorism financing and extremism – allegations that have been used broadly against political opposition in Russia in recent years.
Offshore companies also won’t be able to operate as crypto intermediaries.
Cryptocurrency exchanges will need to have no less than 100 million rubles ($1.2 million) in assets and professional traders no less than 50 million rubles in assets to be approved for trading.
It will be possible to buy cryptocurrency on these licensed platforms only using accounts at Russian banks, according to the bill. Trading platforms must provide records about users and their transactions to the anti-money laundering agency. The platforms must make a special note about funds coming from miners’ addresses.
Miners, in turn, will have to report their income to the tax authorities. Russian data centers can provide facilities for miners only if they are owned by Russian entities. Big miners must register in a dedicated list of miners. Small “home” miners don’t have to do that, unless they exceed a certain threshold in electricity consumption, which isn't specified in the bill.
According to Russian lawyer Mikhail Uspensky, the bill's approach is the most serious and comprehensive one he's seen over the half-a-decade he's been participating in legislative discussions around crypto in Russia.
"There is a powerful coalition in the executive branch of power against the total crypto ban," Uspensky told CoinDesk. "There is a dedicated working group in the government for cryptocurrency regulation in general, not just this particular bill."
The bill has a narrow focus on regulating fiat-to-crypto on-ramps, but also, importantly, it touches mining for the first time, Uspensky said.
"Creating official registers [for cryptocurrency exchanges and miners] are a normal regulatory practice in Russia," he said, though the bill will most probably change as it goes through the legislative process and won't be passed in its current format.
UPDATE (FEB. 24, 16:04 UTC): Adds comments from lawyer Mikhail Uspensky.
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