Russia Will Approve Bitcoin as Legal Currency

The government and the Central Bank of Russia are preparing a bill to legalize BTC and other cryptocurrencies in the country.
Days after President Putin called for unifying criteria on Bitcoin mining and cryptocurrency operations, the issuing institute folded to the Kremlin’s line.
Those who do not strictly comply with the cryptographic rules will be fined and sanctioned according to the Penal Code.

The bill to legalize and regulate the circulation of Bitcoin and other digital currencies in the Russian Federation will be approved before February 18, the Kommersant news agency reported this week.

The joint proposal of the government and the Central Bank of Russia establishes the recognition of BTC and cryptocurrencies as currencies and not as digital financial assets. However, its trading will need to abide by the same rules that apply to fiat money and any others that may be approved.

Only fully identified users will be able to make transactions with cryptocurrencies, through the national banking system and authorized intermediary companies, probably government-legalized peer-to-peer (P2P) platforms.

According to the bill, all operations for amounts greater than 600,000 rubles (about US $8,000) must be declared, the Russian news agency reported. Other transactions for similar amounts that do not meet the legal parameters will be considered an aggravated criminal offense, as established in the Penal Code.

Regulations Will Not Affect BTC Mining

Additional sanctions, including fines, are also provided for those who accept cryptocurrencies as a payment instrument by unauthorized means. The proposed regulations will not affect Bitcoin mining or other issues related to digital financial assets.

Many crypto exchanges allow users to buy, sell or store cryptocurrencies without revealing their personal information or their movements.

If the bill is approved, as is almost certain, the privacy of operations with digital currencies will not be allowed. Users will have to provide their identity and all other data required by the intermediary entity.

By centralizing operations through banks and supervised digital platforms, the Russian government will have full access to the identity of users and the movements they make through a system called “Transparent Blockchain” of The Federal Financial Monitoring Service (Rosfinmonitoring), which controls operations with rubles or currencies.

In Russia, there are around 12 million cryptocurrency wallets with deposited funds of more than USD 26,000, according to estimates by the Ministry of Finance.

On the Flipside

A month ago, the Central Bank of Russia had requested the banning of BTC and other cryptocurrencies, considering them a threat to the stability of the Russian financial system and a risk to the monetary policy and economic well-being of Russians.
It was enough for President Vladimir Putin to say that the country has competitive advantages for BTC mining due to its surplus electricity for the Russian issuer to change its mind and agree to the proposal.

Why You Should Care

Part of the proposed new regulation could come into effect in the second half of this year or as early as 2023, the media said. Although there is still no certainty about when and how it will begin to be applied.