Future of cryptocurrency regulation in Russia

Looking back on the past events it is completely impossible not to see that news on government regulation greatly affect the market. China became the biggest FUD maker back in 2018 by banning ICO and expelling cryptocurrency exchanges. It was a hard time for all of us. Then South Korea dropped the market by announcing a major ban on cryptocurrency. Hopefully the story ended up with a solid regulation law that is not even close to banning cryptocurrency. So it looks to be important to know what is going on in other counties. Will they choose to follow China and throw more FUD at us, or will they join Japan and bring the market up, or will they be the one in the middle like South Korea? In this article I want to give you some clues on what is going on in Russia.

So what is the current situation?

Russian laws pretty much ignore the existence of cryptocurrency. With no regulation Russians has been participating in the market for years. It is hard to say how big the Russian market is now, but it is certainly bog enough to affect the market. There are a lot of miners in Russia as it is rather cheap. A couple weeks ago one Russian businessman bought a whole power station for mining. There are a lot software developers in Russia and a lot of them work in block chain projects. The most know cryptocurrency from Russia is WAVES platform. There are a lot of other projects like Cindicator. Vitalik Buterin is russian and he will not leave russian crypto market without his attention. In summer 2017 Vitalik met with Putin and government opinion on cryptocurrency significantly shifted towards positive.

What is to happen next?

On December 28th Russian ministry of finance released project of the law to regulate cryptocurrency. In general proposed law is about regulating and fighting with anonymity in transactions, and not about banning anything. Here are the key points of the law:

Cryptocurrency (coin) and tokens has different definitions. Coin is a type of digital financial asset, but not a currency. Token is a digital financial asset created in order to attract financing only. Smart contract is a legal contract in electronic form (government and law will protect rights of participants). Mining is legal and is considered to be business activity. Cryptocurrency exchanges are called “The operator of the exchange of digital financial assets” and are legal as well.
ICOs are legal and can be held on Russian territory. There are a lot regulations proposed for ICO. In general to create an ICO you must do a lot of paper work and provide a lot of information to both government and future participants. So far it looks like creating a SCAM ICO will be almost impossible, which is good. At the same time it will be much harder to fulfil all the requirements.
Everyone can participate in ICO. The bad side is that the laws defines qualified investors and average investors. According to the law you can only contribute 50k RUB (890 USD) in a single ICO unless you are a qualified investor. It seems low unless you check the average income in Russia that is only 35k RUB. Actual average income in Russia is much bigger, but Russian do not actually like paying income taxes so they cover real income. Also it seems the law only affects ICOs held in Russia.
People can buy and exchange cryptocurrency on legal exchanges. Currently a lot of people prefer exchange points more than exchanges. Exchange points offer larger commission, but there is no registration. Also exchanges that accept RUB like EXMO or YoBit don’t really have a good reputation. New law will ban these exchanges. The law doesn’t define if you should pass verification or not. Most probably anonymous accounts on exchanges resisted in Russia will be banned. Also taking into account government’s love for blocking access to internet resources they can start blocking foreign exchanges (in VPN we trust!). Central bank has a different opinion and want to allow to buy only tokens, but for now it is just FUD.

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