Russia’s turbulent relationship with the cryptocurrency industry entered a new chapter this week as the nation’s central bank appeared to suggest a ban on all crypto-related activity.
The news centres around Russia’s plans to legislate the cryptocurrency industry through its “On Digital Financial Assets” bill. Apparently the bill will now be updated to outlaw the issuance and circulation of cryptocurrencies.
The previous draft of the bill had allowed for trading, but now with these apparent amendments only the ability to hold crypto will be accepted. Possible punishment will also be handed out to those who violate the law.
The Bank of Russia’s legal executive, Alexey Guznov, revealed the news to local news agency Interfax on March 16. He explained the decision calling the industry a “risk” which could not be taken in good conscience currently. He told Interfax:
“In terms of the functioning of the financial system and consumer protection system, legalization of the issuance and facilitating the circulation of cryptocurrencies is an unjustified risk. As such, the bill explicitly prohibits emission and organization of cryptocurrency circulation, introducing legal liability for violating these rules.”
On the actual application of the bill and the finer details, Guznov was scant on detail. However, he did say that the bill could be passed in the spring parliament session of this year.
This seems to be a shocking and disheartening development for an area of the world which holds a curious and engaged population with cryptocurrencies. Yet there is also a need for calm as this is one of many twists and turns in the life of this “On Digital Financial Assets” bill which was introduced in January 2018.
This lack of progress is no doubt caused by the warring factions within the government. According to reports, Russia’s Ministry of Finance is battling to make legislation but the Bank of Russia is pulling in the opposite direction, and a resolution has not been made, despite President Vladimir Putin’s numerous calls for action.
The Bank of Russia as a long history of rubbishing crypto. The regulation chairwoman, Elvira Nabiullina, said Russia didn’t need a national cryptocurrency and a report last month from the bank linked crypto transactions to money laundering risks.
Despite this reluctance for its citizens to hold their own decentralized crypto, the Bank of Russia is also reportedly planning its own digital currency. They tested a pilot tokenization project last December.