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Russia Plans To Ban Public Crypto Operations, While A CBDC Is Under Discussion

March 23, 2020

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Russia Plans To Ban Public Crypto Operations, While A CBDC Is Under Discussion

A new bill subjecting digital financial assets is being discussed in Russia, where regulators seek to ban the issuance and circulation of new cryptocurrencies, inspiring US regulators to act in an analogous fashion.  

It appears that while Russia is one of the most informed countries when it comes to blockchain technology and by extent cryptocurrencies, they are not necessarily happy about the public, unregulated digital asset scene, and probably for a good reason. 

In a recent interview published by local news outlet Interfax yesterday, Alexey Guznov, head of the legal department at Russia’s central bank cited that although cryptocurrency trading was allowed according to the previous bill “On Financial Assets”, the country is now considering to ban everything crypto-related except holding.

The way I see it, that means private companies utilizing blockchain technology and/or digital financial assets will be eligible to operate within the country as long as they are transparent with local regulators and government agencies. 

On the other hand, unregulated and public cryptocurrencies will be considered illegal considering they are run by open-source communities and are not registered legal entities, therefore, one could hold public cryptos, but if you engage in trading or attempt to redeem your cryptos to fiat and/or other physical or digital assets already regulated by the system you will have to be taxed accordingly. 

Read More: Ethereum Once Again The Blockchain Of Choice For Private Giants

So, this is not necessarily a bad thing, but more of a clarification labeling subjecting different crypto functions according to their legal status. 

“In terms of the functioning of the financial system and consumer protection system, legalization of the issuance and facilitating the circulation of cryptocurrencies is an unjustified risk. As such, the bill explicitly prohibits emission and organization of cryptocurrency circulation, introducing legal liability for violating these rules.”  – Guznov said.

Does this have to do with the recent market drop? Probably, and Russia is one step ahead, making sure no new out-of-nowhere millionaires are born in the country that is already struggling with excessive gaps between the unimaginably rich and the extremely poor. 

Furthermore, Guznov says that if someone who holds Bitcoin performs a transaction in a jurisdiction that does not prohibit Bitcoin (BTC), then there’s nothing Russia can do about it, and therefore they are keen on banning crypto trading from scratch, at least on a domestic scale. 

Once again, this is not a straight downer for cryptos, but more of an insurance plan for Russian investors who are lured to part their hard-earned fiat for cryptocurrencies such as Bitcoin and Ethereum. 

Read More: What Lawmakers Make Of The Term ‘Blockchain’ In 2020?

Analogous acts can be observed in China and Japan, where officials try to inform investors about the risk underlying crypto assets, with Japan going as far as limiting the margin earned from cryptos to +100% in order to avoid the birth of sudden oligarchs while at the same time promoting crypto adoption as the margin level is also a safe=net for negative market drops.

Finally, although Russia is not particularly happy with citizens engaging in crypto transactions, a native digital currency is being discussed as proposed by Russia’s central bank head Elvira Nabiullina.