Russia To Legalize Crypto Payments, But Proposal Causes Internal Concerns

Per a report from local news outlet Kommersant, the Russian Ministry of Finance has completed a bill addressing crypto payments in the country. The document was obtained by the local news website and confirmed by two different sources.

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The bill could finally provide citizens and Russian crypto investors with clarity around digital assets and digital mining. Called “On Digital Current”, the document addresses previously unexplored aspects of Russian regulation for this nascent asset class.

Among these aspects is the classification of digital currency, the legal framework for its issuance and legal circulation in Russia, certifications, trading, and more. As Kommersant noted, Russian entities will need to be granted permission to trade cryptocurrencies and will need to comply with a rigorous identification process. The local media noted:

According to the draft law, digital currency can be accepted as a means of payment that is not the monetary unit of the Russian Federation, as well as an investment, while there must be no obligated person in relation to it.

Crypto platforms will need to comply with a minimum capital to offer their services in Russia. This amount is set at around $40,000 for exchange operators and over $100,000 for digital trading platforms.

These entities will need to approve a “stringent” process to stay compliant with Russian regulations, such as the creation of separate units, annual reports, internal control and audits, and complete registrations on specialized entities for Anti-Money Laundering (AML), and more.

In that sense, if a crypto exchange wanted to offer its services in Russia, operating from the ground, it will need to complete this process and get a license from an “authorized body” appointed by the Russian government. In addition, exchanges will need to keep strict control of their users’ data.

Russia will legalize crypto for payments. Surprise surprise.

— CZ Binance (@cz_binance) April 15, 2022

Why The Russia Crypto Payment Law Could Be Futile

The above could be cumbersome for small companies, and for the privacy of crypto investors in Russia. The data obtained from the users must be kept and updated daily.

As the bill clarified, according to Kommersant, only Russian entities can apply to offer their services. In order for foreign exchanges to get a license of operations, they would have to create a business entity in Russia.

At the same time, Russian nationals are allowed to trade cryptocurrencies on international exchanges. The Russian regulators seem to believe their Know Your Customer (KYC) policies are sufficient to provide the local authorities with their data. The media outlet added the following quoting Andrey Tugarin, managing partner of law firm GMT Legal:

It will be impossible to sell or buy digital currencies without passing identification. The operator will be able to deposit and withdraw fiat currencies only through banks using a bank account.

This bill seems a step in a good direction for crypto users in the country. However, they have raised concerns from Russian entities. Some believe the document fails to address key subjects.

Thus, people could avoid the law altogether and simply turn to international exchanges or the black market. Miners will have to go through a similar process as traders, as Russia expects to create a national registry for the sector.

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At the time of writing, Bitcoin (BTC) trades at $40,400 with a 1% profit on the 4-hour chart.