According to a local industry advocate, despite the country’s first cryptocurrency law being passed in January 2021, the country’s cryptocurrency economy is still mainly unregulated and fraught with uncertainties.
The current Russian crypto rules, according to Yury Pripachkin, president of the Russian Association of Cryptoeconomics, Artificial Intelligence, and Blockchain (RACIB), are nothing more than “half-measures” with no systemic answers.
Pripachkin mentioned Russian President Vladimir Putin giving repeated successive commands to embrace crypto law over the last four years in an interview with local news outlet RBC. The CEO said that while the global market valuation of cryptocurrencies has increased from roughly $200 billion in 2017 to $2.7 trillion today, local politicians have done nothing to capitalise on this value:
Pripachkin stated, “Russia has done nothing to control the local cryptocurrency industry. Which accounts for 10% of the worldwide crypto market”. He elaborated that the size of the Russian crypto market is similar to the $270B in yearly government budget income.
On Digital Financial Assets
According to Pripachkin, Russia’s crypto law “On Digital Financial Assets” offers a legal framework for crypto in the broad sense. But does not define key industry concepts. Such as smart contracts or govern activities such as crypto mining, issuance, or taxes.
The Russian cryptocurrency business, according to the chairman of RACIB, is mostly a grey zone. The existing crypto regulation in Russia, according to Anna Maximenko, a counsel at the international law firm Debevoise & Plimpton, is “exclusive to the definition of cryptocurrency”. And a few other issues such as the restriction on crypto payments.
“At the moment, other parts of cryptocurrency turnover, including as exchanges and investor requirements, remain unregulated,” Maximenko explained. According to the expert, the lack of regulation has resulted in no crypto exchanges being registered in Russia. But people may still utilise services from overseas crypto exchanges such as Binance, Huobi Global, Paxful, and others.
Mining cryptocurrency in conjunction with the accompanying gas
“Given the Bank of Russia‘s attitude on cryptocurrencies, it’s possible that no Russian crypto exchanges will emerge, while overseas crypto exchanges would remain in limbo”, Maximenko added.
The announcement comes as the Russian government expresses growing interest in cryptocurrencies such as Bitcoin (BTC). Some ministries have proposed mining cryptocurrency in conjunction with the accompanying gas.
When it comes to the interests of Russian citizens, however, the Russian government is still suspicious about Bitcoin. Cryptocurrency investing becomes increasingly popular among Russian investors. Nevertheless, the Bank of Russia is attempting to limit transfers to crypto exchanges.