President Vladimir Putin is asking for consensus on cryptocurrency policy between conflicting approaches by Russian authorities.
During a recent government meeting, Putin requested that the Ministry of Finance and the Central Bank to ‘come to some kind of consensus’ on banning or regulating cryptocurrencies in Russia. “The Bank of Russia deals with these issues and regulates them,” Putin said at the meeting. “The central bank is not standing in the way of regulatory progress and is itself making the necessary efforts to introduce new technologies into this sphere of activity.”
Last week, in a paper discussing the role of cryptocurrency in the Russian financial sector, the Russian Central Bank proposed a ban on its usage, trading and mining. In addition to being volatile, the paper said cryptocurrencies frequently facilitate criminal operations like fraud and money laundering. Consequently, the paper recommended new legislation and regulations that would prevent any crypto-related business in the country.
However, earlier this week representatives from the Ministry of Finance countered this perspective, instead believing that regulations, not restrictions, are needed. Speaking at the RBC-Crypto conference, director of the financial policy department of the Ministry of Finance, Ivan Chebeskov criticized the prospective blanket-ban, saying it would contribute to Russia’s technological stagnation.
“We need to give these technologies the opportunity to develop,” Chebeskov stressed. “In this regard, the Ministry of Finance is actively involved in the development of legislative initiatives in terms of regulating this market.” He subsequently revealed that the finance ministry had prepared a concept for regulating the industry. Details include carrying out all crypto transactions through Russian banks, identifying crypto wallet holders, and classifying digital asset investors as either qualified or unqualified.
Crypto in Russia
Cryptocurrencies have been a controversial subject in Russia for many years. While the government has warned of illicit uses for cryptocurrencies, it eventually gave them legal status in 2020, but banned their use as a means of payment.
However, cryptocurrencies in Russia have surged in popularity, with an estimated 7% of the Russian population owning cryptocurrency, according to Konstantin Shulga, CEO of digital financial marketplace Finery Markets. In light of the increasing popularity, the central bank plans to test its own digital ruble this year.
Meanwhile, Russian has also been accounting for an increasing percentage of the global hash rate, up to 11.2%, following China’s ban on cryptocurrency mining last year. During the recent government meeting, Putin acknowledged that Russia was well-suited for the practice. “We do have some competitive advantages here, especially in so-called mining,” Putin said. “I am referring to surplus electricity and the well-trained personnel available in the country.”