Russia has decided to shift from banning cryptocurrencies to recognising them as a form of currency, according to local newspaper Kommersant.
This new law would seek to put digital assets under state oversight with “strict obligations for all participants in the professional market and an emphasis on protecting the rights of ordinary investors”.
The decision comes not long after Russia’s central bank decided to fully ban digital assets, claiming that their speculative nature posed a threat to the financial stability of Russian citizens. This, however, was met with great opposition from the country’s finance ministry.
Banks Will Take Control of Crypto Transactions
The new law proposes a framework that will treat crypto as an “analogue of currencies”, and it’s expected to come into force by February 18.
First of all, citizens will only be able to buy crypto through “licensed and locally registered financial entities”. This means, of course, that local banks will work as intermediaries between users and crypto companies. It also means that users won’t have control of their funds.
Cryptocurrency exchanges, decentralised marketplaces and other related platforms will be forced to open a bank account to register as legal entities – as long as they meet certain conditions, such as having sufficient capital and liquidity.
Criminal Charges For Not Declaring Crypto Transactions Over $8000
Second of all, the Russian government could collect over US$13 billion as tax payments from this crypto law. All crypto transactions over 600,000 rubles (approximately US$8,000) must be declared to the Federal Taxation Service (FNS), or criminal charges will result.
Third, banks working with crypto exchanges won’t use blockchain analytics tools from security companies such as Elliptic or Chainalysis. Instead, they’ll be using the “Transparent Blockchain”, a tracking tool developed by Russia’s financial watchdog (Rosfinmonitoring).
The Transparent Blockchain is capable of identifying owners of crypto wallets and collecting information from the darknet, thus detecting illegal activity with the use of digital assets.
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