Finance Ministry unveils plan to regulate cryptocurrencies in Russia, instead of banning them

The Finance Ministry has prepared its own concept for regulating cryptocurrencies in Russia, which envisages conducting operations with digital assets through banks, full identification of users and transaction tracing. This was reported by РБК, citing the ministry’s document and a letter addressed to Deputy Prime Minister Dmitry Chernyshenko.

The ministry is convinced that banning the circulation of crypto assets, as the Bank of Russia proposes, is impossible — it would merely lead to an increase in the share of the shadow economy and a rise in fraud cases. According to the Finance Ministry, Russian citizens’ crypto wallets hold around 2 trillion rubles.

Regulation of the sector, however, will help “minimise threats to financial system stability and reduce the use of cryptocurrencies for illicit purposes,” as well as increase budget receipts through taxes, the ministry believes.

The letter also sets out the FSB’s position, which sees the possibility of creating tools to obtain user data from crypto exchanges and crypto exchangers, as well as legally tracking transactions. In addition, the development of regulation would enable the seizure and confiscation of digital assets on wallets. The preparation of such norms was reported by the General Prosecutor’s Office.

Under the Finance Ministry’s concept, cryptocurrency transactions are planned to be organized within the banking infrastructure for control over them.

To carry out transactions individuals and legal entities will need to undergo identity verification and open a wallet through a bank. Individuals should be divided into qualified and non-qualified investors.

Banks that provide functionality for the crypto market should hold universal licences. They will monitor clients’ operations for illicit activity, store data on deals for at least five years, and also provide user data to regulators or law enforcement on request.

To control transactions and detect crypto-related crime, the Finance Ministry proposes using the ‘Transparent Blockchain’ service.

As a model for full customer identification procedures, the ministry proposes taking the Swiss service Aximetria, which collects a large amount of data — full name, address, phone number, bank account, date of birth and others. The department also wants to track information about the device from which transactions are made.

The document also proposes creating operators of digital currency exchanges, which can operate under the P2P exchange or exchange model. They must register in the Bank of Russia’s registry.

The Finance Ministry does not rule out foreign cryptocurrency exchanges operating in the Russian market. For this, they will need to open a representative office in the Russian Federation and integrate with local banks.

At the same time, platforms registered in countries with favorable tax regimes or not providing data on financial operations will not be able to operate in Russia.

The regulation is proposed to be distributed among the Central Bank, the Finance Ministry, the Federal Tax Service, the Ministry of Digital Development, the General Prosecutor’s Office, and Rosfinmonitoring.

In addition, the document notes the need to define parameters for cryptocurrency mining. The Bank of Russia had also proposed limiting it.

Earlier, Ivan Chebeskov, head of the Department of Financial Policy, stated that the Finance Ministry had developed its own concept for regulating the market.

According to According to the deputy head of the State Duma committee on security and anti-corruption Andrei Lugovoy, the Bank of Russia is the only body taking a position of a total ban on cryptocurrencies in Russia. do not support it in the government, in the State Duma, or in the security agencies.

President Vladimir Putin urged the government and the Bank of Russia to come to a unified view on regulating the industry.

Read ForkLog’s bitcoin news on our Telegram — cryptocurrency news, prices and analytics.