Russia’s lawmakers have put forward a daring proposal to halt the organization and advertising of cryptocurrency activities starting from September 1, according to reports from local media.
This legislation would restrict the right to handle cryptocurrencies exclusively to miners and projects that receive the nod from the Central Bank, highlighting the country’s cautious stance towards the volatile digital currency market. The initiative, while still under debate, would completely redefine the digital economy in Russia.
Sweeping Changes to Crypto Regulations
As outlined in the newly revised bill No. 237585-8, the Russian State Duma is looking to reshape the future of cryptocurrency within its borders. This latest version, which updates the rules on cryptocurrency mining, proposes stringent restrictions that would largely prohibit the circulation of digital currencies across the nation.
The legislation specifies that the mining of digital currencies and the operation of mining pools would be exempt from these restrictions. Moreover, all forms of advertising related to digital currencies or their circulation are to be banned outright.
The proposed amendments to Article 14 of Law 259-FZ clarify these new prohibitions. They define the ‘organization of circulation’ of digital currency to include any activities that facilitate transactions transferring digital currency between owners, where any party is a Russian legal entity, or an individual residing in Russia for over 183 days within a year.
Additionally, the use of Russian information infrastructure in these transactions is also covered under the proposed ban.
Despite existing laws that prohibit cryptocurrency payments in Russia, the circulation of such digital assets has not been formally banned until now. This bill aims to close that gap, ensuring that cryptocurrencies do not become a commonplace element of financial transactions in Russia.
Limited Exceptions and International Aspects
Under the proposed legislation, while the general public is restricted from engaging in cryptocurrency transactions, certain approved entities will be able to continue operations under strict conditions. The Central Bank, for instance, is slated to spearhead an experimental legal regime (EPR) that will explore the use of cryptocurrencies in international payments.
Scheduled to commence on September 1, 2024, it will be closely monitored by the Central Bank in coordination with Rosfinmonitoring, the FSB, and the Ministry of Finance.
The bill also outlines provisions for miners, allowing them to sell the digital currency they obtain, provided they do so without utilizing Russian information infrastructure. This is seen as a measure to mitigate the risks associated with digital currency circulation, reflecting a cautious approach to what many in the Duma view as a potentially destabilizing financial technology.
In terms of enforcement, the Russian government is considering updates to the Code of Administrative Offenses, the Criminal Code, and the Code of Criminal Procedure. These amendments would introduce penalties for the illegal circulation of cryptocurrencies, although specific details and submissions to the parliament are still pending.
