The Russia cryptocurrency market is about to change, as the country’s legislative body is ready to adopt new rules.
Russia’s Finance Ministry has proposed a new approach to cryptocurrency, in which crypto-assets will be classified under three separate legal categories.
The three tiers set by the new Russia cryptocurrency law are ‘Virtual Assets’, ‘Technical Tokens’, and ‘Digital Finance Assets’. Prime Minister Dmitry Medvedev has set the deadline for adopting the bill for 1 November.
Increased attention on the Russia cryptocurrency scene
Russians use cryptocurrencies in multiple contexts, including online shopping and as investment opportunities. However, without proper legislation in place, Russian authorities can’t govern how cryptocurrencies move inside the country. This situation has caused public institutions to establish an overall negative attitude towards the use of cryptocurrencies.
Even though Russia has positioned itself as an active supporter of blockchain technology, regulators share different opinions when it comes to crypto-assets. For instance, the Central Bank of Russia is against the integration of cryptocurrencies in the public monetary system. On the other hand, some banks and politicians, Vladimir Putin included, have insisted on adopting crypto regulations instead of banning digital coins.
This second approach would allow the authorities to have control over transactions, collect taxes, and make sure that all players comply with anti-money laundering laws.
At the beginning of 2019, Vladimir Putin was pushing the government for a more regulated Russia cryptocurrency scene. It took regulators a while to come up with a complete set of rules, but it seems it was worth the wait. Russia might adopt one of the most comprehensive cryptocurrency laws to date.
Adopting a comprehensive law
The three-tier approach is similar to how some other countries are regulating cryptocurrency and crypto-assets trading. However, Russia cryptocurrency laws look to provide more clarity for companies, traders, and tax specialists.
Virtual assets will include cryptocurrency that allows users to transfer value, like Bitcoin. Ether, on the other hand, could be classified as a technical token, as the entire Ethereum network depends on it to function. The third category belongs to ICO tokens. They will be described as digital finance assets since they often include dividends and other benefits.
By separating digital assets, the Russian legislative body will be able to apply different rules for each category, depending on their role in the market. It’s a move that enables regulators and enforcement agencies to make customised rules for each type of crypto-asset. It also minimises the risks that come with guessing or assuming which is the right law to follow for digital assets.
All in all, the three-tier law should help to benefit traders, end-users, and companies investing in cryptocurrency.
Is Russia ready to fully embrace cryptocurrency?
While Russia continues to have strong roots in a traditional economy, the number of blockchain projects in the country continues to grow. Russia seems decided on accelerating the development of new technology and bringing its advantages to national companies.
Not only do authorities want clear and comprehensive laws, but they also want them fast. First President Putin and now Prime Minister Medvedev are urging the Russian Parliament to adopt legislation that regulates digital assets.
While currently the Russia cryptocurrency scene isn’t governed by specific laws, many crypto-related instruments are already permitted in the country. For example, crypto debit cards are legal, as long as owners don’t forget to declare their full income and pay taxes for it.
Furthermore, Russia has a series of crypto-related laws in its pipeline for the coming months. From digital rights to smart contracts and crowdfunding, nothing will be left outside of legal protection.
Russian authorities have made it pretty clear than cryptocurrencies won’t replace the national fiat – the ruble. However, the Russian government could try to substitute other fiat currencies with crypto. If the new set of laws is put into effect and proves its efficiency, we may see a new approach to cryptocurrency as an alternative to the US dollar.
Regulation to increase adoption?
The three tiers of Russian cryptocurrency regulation are likely to clarify a series of use cases for digital assets. This makes it easier for companies to integrate crypto-assets in their operations while remaining compliant with financial and tax regulation.
As authorities take step after step in regulating the Russian cryptocurrency scene, we may also witness accelerated crypto adoption in the country. If people feel more secure about their investments, they could choose Bitcoin or altcoins as alternatives to other assets.