21 Dec 2021 · 3 min read

Russia Still No Closer to Regulating Crypto Despite Central Bank ‘Concession’

Source: Adobe/frag

 

Russia’s staunchly anti-crypto Central Bank has spelled out its “vision” for crypto regulation – but the painfully slow process of formulating a regulatory framework appears to be frustrating even the parliamentarian charged with creating legislation for the sector.

As previously reported, the head of the State Duma’s Committee on the Financial Markets Anatoly Aksakov last week admitted that draft crypto legislation – originally slated to be unveiled for a vote in the Duma before the end of 2021 – will likely not appear any sooner than spring 2022.

The reason for the delay is a messy impasse between the Central Bank and other anti-crypto regulatory and government voices and pro-business advocates in the government, who prefer a more pragmatic approach.

The Central Bank has previously spoken in favor of a total China-style ban. But, per the news agency Tass, the bank could be ready to open the door for some sort of compromise. 

Instead of creating a (likely totally unworkable) crypto blackout, the bank now appears to favor allowing Russian citizens and businesses to “acquire and store crypto” – so long as tokens are not handled by domestic entities. Russia-based brokers and commercial banks would also be frozen out of the picture.

The comments came from the Deputy Chairman of the Central Bank, Vladimir Chistyukhin, who was quoted as having told reporters in the Duma:

“I think that we will resolve the issue [of crypto] by amending legislation. There will be a more precise definition of how cryptocurrencies can circulate.”

Chistyukhin added that the Central Bank was now “preparing a report” that would further explain how it envisioned crypto fitting into the greater financial picture.

He said:

“The report will contain our stance as to the place we see for cryptocurrency in the Russian financial market. I will give [you] a hint: We do not see any place for cryptocurrency in the Russian financial market.”

The long-suffering Russian crypto industry was likely unsurprised by this statement, as it has heard many similar declarations from the bank and its arch crypto-skeptic Governor Elvira Nabiullina. The governor has previously stated that domestic banks should stay away from crypto-related business.

However, it seems unlikely that Nabiullina and co will have things their own way. Many of Russia’s wealthiest individuals have made very sizeable crypto investments, Cryptonews.com has been told by multiple sources in the Russian crypto industry.

Furthermore, the tokenization of raw materials and crypto mining have been identified as growth industries by many business leaders – who are determined not to let the Central Bank have its own way.

Even Aksakov appeared to indicate that he had had enough – and urged the government to end the talk and begin the finalization of crypto legislation.

Thus far almost half a decade of talking has resulted in just one piece of legislation – dismissed by Russian crypto insiders as a mere “glossary of crypto terms” – although it did outlaw the use of crypto in payments.

According to RBC, Aksakov said that the state believed Russians had spent around USD 67.6bn on crypto thus far. Last month the Central Bank claimed USD 5bn per year was being transacted in crypto by Russian residents.

He also told a parliamentary hearing that “retail investors are also interested in” crypto. And, in a rare barb at the government, he “called for an end to the issue of cryptocurrency regulation,” the media outlet wrote. Aksakov further stated that “the authorities need to determine their position on digital assets and legislate on the matter.”

But it looks like the impasse will drag on into the next year, no matter how much frustration it causes.

Finmarket quoted the Deputy Finance Minister Alexey Moiseev as stating that there was “still no full agreement regarding the regulation of cryptocurrencies,” adding that in government discussions on the “development of the financial market of the Russian Federation,” Moscow “still has several questions on which we have not come to an agreement.”

“One of these questions is well known to you,” he remarked. “This, of course, is the question of the regulation of cryptocurrencies.”

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Learn more:
- 2022 Crypto Regulation Trends: Focus on DeFi, Stablecoins, NFTs, and More
- Russian Senate, Gov’t Ministries & Central Bank to Create Crypto ‘Working Group’

- Russia: Total Ban on Crypto Ownership Still on Table, Says Top Official
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- Russian Intelligence Service Wants More Power to Seize Crypto, Freeze Wallets
- Russian Senate Finance Chief Says Crypto ‘Probably Has a Future’