Russian Minister Pushes Back against Sweeping Ban on Crypto

Ministry of Economy proposes mechanisms like imposing new rules for crypto assets’ issuance and transactions.

Russia’s ministry of economy has criticized the bill being considered in the State Duma, which seeks to ban the use of bitcoin and other cryptocurrencies in the country, says a report published by local news outlet Kommersant.

Instead of draft bills submitted to the Russian parliament recently, which, if signed into law, will punish crypto dealers with prison terms and hefty fines, the ministry wants to establish mechanisms for “the controlled circulation of virtual money.” The authority believes that the adoption of current bill version will only create an “uncontrolled black market.”

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In a letter seen by the local media, the Ministry of Economy proposes mechanisms like imposing new rules for crypto assets’ issuance and transactions, as well as to bring operators like exchanges and custodians under the government’s supervision.

In contrast, recent draft bills submitted by a group of deputies seek to penalize individuals with seven years in prison and fines of up to $7,000 for using cryptocurrencies in financial transactions. In addition, crypto firms could face nearly $30,000 in regulatory fines if they get involved in crypto business without approval from the Russian central bank.

Russia drafts guidance to banks on crypto transactions

According to head of the State Duma’s financial market committee, Anatoly Aksakov, even with a sweeping ban on crypto assets, users will bypass it through technical means (VPN, etc.), therefore, the prohibitive approach will not solve the problem, but will actually create an uncontrolled black market.

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Recent proposals come as Russia’s parliament could pass its long-awaited crypto laws as early as the upcoming autumn. In May 2018, the lower chamber of the State Duma passed the first reading, almost unanimously, with 410 deputies voted to approve the bill at the hearing, and only one voted against it.

The second reading is when amendments are finalized, after which the bill goes to the upper house, the Federation Council, before being signed into law by President Vladimir Putin.

In an effort to foster regulatory clarity in the Russian cryptos pace, the nation’s central bank has recently proposed fresh guidelines to govern market participants and stakeholders.

As reported, the proposed legislation explains how banks can apply the broader AML framework, dubbed ‘375-P protocol,’ to tackle money laundering related to cryptocurrency activities. Based on a new set of rules, the updated guidance lists 100 signs that would allow banks to label crypto transactions as suspicious.

While the document is undergoing regulatory assessment, it enables Russian banks to put a blanket ban on crypto-asset holders and authorizes them to block transactions or close certain accounts of crypto dealers in Russia.

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