On Tuesday, February 8th, a document appeared on the Russian government’s official website that laid the basic principles for regulating cryptocurrencies. Earlier this year Russia’s central bank proposed a blanket ban on cryptocurrency use and mining on Russian territory, citing risks related to speculative trading and energy usage of the mining industry. Less than a week after the bank’s proposal, however, Russian President Vladimir Putin encouraged lawmakers and bank officials to consider taking a regulatory approach rather than an outright ban.
According to a press release posted to the government website, “the purpose of the regulation is to integrate the mechanism for the circulation of digital currencies into the financial system and ensure control over cash flows in the circuit of credit institutions.” They added that “protection of the rights of citizens, in addition to dividing investors into qualified and unqualified, will be ensured through licensing requirements for cryptocurrency platforms. Those, in turn, will be required to have financial airbags in terms of liquidity and capital adequacy.”
The decision to regulate cryptocurrencies appears to have been made by a number of government agencies with the aid and approval of the central bank, who had previously called for an outright ban. According to their release, “The Ministry of Finance, the Bank of Russia, Rosfinmonitoring, the Federal Security Service, the Ministry of Internal Affairs, the Federal Tax Service, the Ministry of Economic Development, the Prosecutor General's Office took part in the discussion of the regulation of the cryptocurrency market.”
This news comes a week after India announced that they would be adopting a 30% tax on cryptocurrency transactions rather than implementing an outright ban. According to one analysis, India and Russia are the first and third-ranked countries in the world in terms of cryptocurrency users. Combined, these two countries are home to over 118 million cryptocurrency users.