Russian president Vladimir Putin has issued 5 orders which may shape the future of cryptocurrencies in Russia.
In a document entitled “List of instructions for the meeting on the use of digital technologies in the financial sphere“, 5 executive decrees were published on October 10th and include interesting concepts, such as the “Digital Economy of the Russian Federation”. The documents also make very clear that the ruble will be the only accepted currency nationally and that the Russian Central Bank will be in charge of regulating crypto activities.
More traditional approaches tend to treat cryptocurrencies as commodities, but the official Russian documentation clearly implies that cryptos are to be seen as bank-regulated assets.
Below you’ll find the loosely (note: non-oficially) translated text of the new legal measures.
1. The Government of the Russian Federation, in conjunction with the Bank of Russia, shall ensure that changes are made to the legislation of the Russian Federation providing for;
a) determination of the status of digital technologies used in the financial sphere and their concepts (including such as “technology of distributed registries”, “digital letters of credit”, “digital mortgage”, “crypto-currency”, “token”, “smart contract” “) Based on the obligation of the ruble as the only legal tender in the Russian Federation;
b) the establishment of requirements for the organization and implementation of production based on the principles of cryptography in the medium of distributed registries (“mining”), including the registration of economic entities carrying out such activities, and determining the procedure for its taxation;
c) regulation of public attraction of funds and crypto currency by placing tokens by analogy with the regulation of the initial placement of securities.
2. The Bank of Russia together with the Government of the Russian Federation:
a) submit proposals:
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on the creation on the basis of the Bank of Russia of a special regulatory platform (“sandbox”) for the approbation of innovative financial technologies, products and services to the establishment of rules for the regulation of relations related to their application in the financial market.
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on the formation of a single payment space for the member states of the Eurasian Economic Union with the use of new financial technologies, including the technology of distributed registries.
The Russian format is very interesting, establishing different deadlines for each section of the orders and delegating each to a particular person. The name in charge of executing most of these directives is familiar in the West: none other than Dmitry Medvedev, their former president.
Cryptos are now officially supported in Russia and will likely face more bureaucracy as a result of these new regulations. We’re not entirely sure how, technically, they will enforce these rules considering that VPNs and strong cryptography can be deployed to masquerade crypto mining network traffic. High energy consumption by miners may be a tell-tale sign, but then the government would require a large police-like apparatus just to keep an eye on miners.
Our guess is that the mention of a digital economy and the involvement of the central bank in this official activity is a strong sign that there might be some form of government-issued cryptocurrency in the future. This regulation would be compatible with a “digital ruble” issued by the Russian Central Bank.