Russian Crypto Consensus Collapses into Utter Chaos as Finance Ministry, Central Bank Present Rival Bills

Central Bank Cryptocurrency Mining Regulation Russia

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023

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The rest of the world may be talking about the imminent threat of war between Russia and Ukraine, backed by Western allies, but in Moscow, the talk of the political town is…crypto.

As reported, a long-awaited consensus between the Ministry of Finance and the Central Bank was believed to have been brokered earlier this year. This was supposed to have resulted in a piece of draft legislation unveiled today – and rushed before the State Duma (Russia’s parliament) in time for the spring session.

But cracks in the “consensus” began to appear earlier this week when the Central Bank began criticizing the draft bill. Now it appears that there way likely no consensus whatsoever, and that the bitter disagreement between the parties is still as strong as it ever was.

The Central Bank doggedly opposes all forms of crypto adoption, and wants to issue a China-style ban on mining, crypto ownership, and trading. The ministry, meanwhile, wants to regulate the industry with tough measures, but essentially legalize it and allow miners to keep operating provided they pay taxes on their earnings.

President Vladimir Putin had urged the parties to hurry up and settle their differences, but it seems they have done anything but. While the ministry has indeed gone public with the bill, the Central Bank has – remarkably – countered by issuing its own bill, yet again calling for a ban.

So at the same moment when the Finance Minister was briefing some members of the domestic press on the intricacies of his ministry’s bill, it appears that the Central Bank was leaking details of its own draft measure to other media outlets.

RBC stated that it had obtained a copy of the Central bank’s bill, whose authenticity was “confirmed by a source familiar with the [Central Bank’s]” project.

While the ministry’s bill speaks about regulating crypto exchanges and ensuring that crypto traders link their transactions to banks, the bank wants to ban crypto altogether, and hit firms that provide services to crypto traders with USD 13,000 fines. Individual crypto traders, meanwhile, would be hit with fines of up to USD 6,500 for buying, selling, or holding coins.

The media outlet attempted to spin a tiny positive in among the political crypto chaos, noting that the ministry “supports the Central Bank’s position that cryptocurrency should not be used for payments.”

Sadly, however, this one area of consensus is totally moot – due to the fact that crypto was outlawed as a means of payment in Russia two years ago, leaving absolutely no common ground for the parties to build on.

RIA Novosti, which also said it had been briefed by similar “sources,” added that the Central Bank’s bill also proposes banning the dissemination of crypto-related information in Russia – essentially a media blackout of crypto news.

It also wants commercial banks to block crypto transactions and even freeze funds on accounts linked to crypto transactions.

Across the border in Ukraine, meanwhile, the Rada (Ukraine’s parliament) has recently approved a crypto regulation law.

In comments shared with Cryptonews.com, Anto Paroian, the Chief Operating Officer at digital assets investment fund ARK36, stated:
 

“Ukraine’s balanced approach to regulating crypto shows that the adoption of digital assets on a national level doesn’t have to be a zero-sum game.”

Paroian continued:

“On the one hand, legislators don’t have to unnecessarily restrict citizens from accessing this promising asset class in order to put in place appropriate investor protection. On the other hand, crypto enthusiasts don’t need to fear regulation or see it as necessary evil only.”

According to him, as shown by Ukraine, regulation done appropriately can benefit the interests of both parties by enhancing crypto adoption and providing tangible economic advantages.

Beleaguered Russian MPs appear to be far from being able to contemplate this kind of “balanced approach” in the Duma, however.

Anatoly Aksakov, the Chairman of the State Duma Committee on the Financial Markets and the chief architect of Russian crypto legislation, claimed that the Central Bank’s position was “understandable” as crypto bans would likely be put in place elsewhere in the world.

DumaTV quoted him as stating:

“America will ban bitcoin (BTC) at some point. Now it is just a mosquito bite for them, but for us it is more serious than that.”

He opined that most cryptoassets, including BTC, would eventually “crash,” but opined that in the meantime it would be better to tax miners and traders and help bolster the Treasury with the tax revenues.
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