Russia Sets the Stage for Comprehensive Crypto Regulations
Russian officials are gearing up to implement extensive new regulations for the nation’s cryptocurrency sector, aiming to legalize cross-border transactions while significantly increasing penalties for other crypto-related activities. Finance Minister Anton Siluanov emphasized the necessity for legislative measures to restore order in this field during a strategic meeting led by Prime Minister Mikhail Mishustin. He pointed out that cryptocurrency is currently being utilized for importing goods and transferring foreign currency overseas, highlighting that the Finance Ministry has collaborated with the Central Bank to enhance regulatory oversight and stabilize the market.
Framework Established for Addressing Illegal Crypto Activities
Prosecutor General Alexander Gutsan announced the establishment of a legal framework to prosecute individuals involved in the illicit circulation of cryptocurrency, enabling the state to confiscate such assets. This framework also includes mechanisms to track transactions associated with corruption, terrorism, extremism, and drug trafficking, addressing multiple concerns tied to the use of crypto.
Shift in Stance on Crypto Payments Amid Sanctions
Historically, Russian authorities have been resistant to cryptocurrency payments; however, their position has shifted since Western sanctions complicated access to global payment systems. In the previous year, Russia legalized crypto mining and cross-border transactions under an “experimental legal regime” (ELR). Siluanov later proposed the legalization of crypto exchanges, but this idea faced pushback from the Central Bank.
Central Bank Advocates Strict Limitations on Crypto Use
The Central Bank, which views cryptocurrency as excessively risky, aims to confine its usage strictly to cross-border payments under the ELR and transactions conducted by affluent investors through licensed entities. The regulator maintains that all other applications, including domestic payments and retail investments, should be prohibited. First Deputy Governor Vladimir Chistyukhin stated that any crypto activities conducted without proper authorization should be classified as illegal and subject to legal action, advocating for limited access to cryptocurrency to mitigate potential financial and social risks.
Uncertainty Surrounding Existing Crypto Holdings
Despite the Central Bank’s refusal to acknowledge cryptocurrency as a valid payment method, it has suggested banning all transactions between Russian residents that fall outside the ELR framework, imposing penalties for violations. The regulator has yet to clarify the fate of the substantial amounts of cryptocurrency currently owned by Russian individuals.
Government Considers Broader Participation in Crypto Market
This year, the Central Bank estimated that domestic crypto transactions exceeded 1 trillion rubles (around $12.4 billion) monthly, with wallets linked to Russian users holding approximately 827 billion rubles (about $10.2 billion) as of March. Siluanov noted that the government cannot overlook the magnitude of this activity. The Finance Ministry’s perspective contrasts with that of the Central Bank, favoring a more gradual approach to bring the market out of obscurity without hindering innovation. Finance Ministry official Alexei Yakovlev suggested lowering the legal participation threshold to enable a broader test group, stating that access to legal infrastructure should not be restricted to a select elite.
Ongoing Discussions on Regulatory Framework
Chistyukhin acknowledged that the Finance Ministry and Rosfinmonitoring generally support the Central Bank’s stance, although discussions on the details continue. Officials are optimistic about finalizing the new regulatory framework by year-end. Concurrently, security forces have begun conducting raids on cryptocurrency exchanges throughout Russia.
