Russia’s president Vladimir Putin has issued orders pertaining to the regulation of cryptocurrencies, initial coin offerings (ICO), and cryptocurrency mining. He wants changes made to the Russian legislation to regulate cryptocurrencies and tokens. Mining operations will also be registered and taxed. The prime minister and the central bank governor will be responsible for completing the orders by July next year.
Russia’s president Vladimir Putin has officially issued five orders concerning the use of digital technologies in the country’s financial sector, according to the Kremlin’s website. He put the prime minister, Dmitry Medvedev, and the central bank governor, Elvira Nabiullina, in charge of completing these orders. Three of them are directly related to cryptocurrencies and ICOs, to be completed by July 1, 2018.
The Legal Status of Cryptocurrency
The first order instructs the government to work with the central bank to “ensure that changes are made to the legislation of the Russian Federation” to determine the status of digital technologies including cryptocurrency, token, and smart contract. This is to be “based on the obligation of the ruble as the only legal tender in the Russian Federation,” the order describes.
Prior to Putin’s orders, the government has already been active in discussing how to treat cryptocurrencies. “The use of cryptocurrency as a monetary surrogate is actively proposed for the calculation of goods and services,” Nabiullina was quoted by Tass last month. However, she added, “we will not allow the use of cryptocurrency as a money substitute.”
Deputy Finance Minister Alexei Moiseev, on the other hand, has proposed regulating cryptocurrencies including bitcoin as financial assets.
Mining Registry and Taxation
The second order mandates the government and the central bank to change legislation to establish the requirements for organizations engaged in cryptocurrency mining. This includes, according to the order:
The registration of economic entities carrying out such activities, and determining the procedure for their taxation.
Interest in mining has grown substantially in Russia. Google research shows that searches for mining related terms in the country were up 560% in the first half of 2017. Meanwhile, Russian regions such as Kaliningrad and Leningrad are trying to attract miners. The governor of the Leningrad region recently invited cryptocurrency miners to set up mining farms in the region’s upcoming technopark.
Early this month, the finance ministry proposed registering cryptocurrency miners and licensing crypto exchanges. A State Duma Deputy has also separately proposed to officially legalize cryptocurrency mining in order to tax miners.
The third order directs the government and the central bank to change legislation for the regulation of ICOs.
A working group at the State Duma headed by Elina Sidorenko has already been working on ICO regulatory proposals prior to Putin’s orders. Additionally, the Russian Association of Blockchain and Cryptocurrency (RABIK) is separately drafting proposals to legalize ICOs. There was also a proposal to create a registry for Russian companies planning token sales.
However, concerns over regulations obstructing ICOs prompted First Deputy Prime Minister Igor Shuvalov to promise not to kill such innovations last week.
Other than the three aforementioned orders, Putin has ordered the government and the central bank to submit two proposals. The first is on creating a regulatory “sandbox” for financial technologies (fintech), to be completed by December this year. The second proposal is for the formation of a “single payment space” using blockchain technology, to be completed by March 20 of next year.
Meanwhile, the government is also working on Russia’s national cryptocurrency, the cryptoruble.
What do you think of Putin’s orders? Will they help cryptocurrency flourish in Russia? Let us know in the comments section below.
Images courtesy of Shutterstock, Kremlin’s website, and HTB.
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