Page 8 - bne_Tech_06_2018

Top Stories
June 2018 www.intellinews.com I Page 8
Russia preliminarily adopts crypto-unfriendly legislation
Vladimir Kozlov
Russia has made the first step towards the adop- tion of a long-awaited legislation on cryptocurren- cies and blockchain, but major questions con- cerning specifics still remain, while experts warn that in its current shape the legislation is far from being crypto-friendly.
In late May, the State Duma, the lower chamber of Russian Parliament, adopted in the first reading a package of three draft laws, which are expected to bring regulation into the crypto space.
In order to become law, the drafts will have to pass the second and third readings, get approval from the upper chamber, the Federation Council, and ultimately be signed by the president.
And while the preliminary adoption is viewed as a major step towards crypto regulation by the local crypto community, experts and industry insiders have raised a number of concerns.
"If adopted, the new laws won't be conducive to effective regulation, but will trigger a massive migration of investors, miners and entrepreneurs to countries with a more crypto-friendly legisla- tion, such as Switzerland, Malta, Estonia, and Belarus," Yuri Pripachkin, president of the Rus- sian association of cryptocurrency and blockchain (RACIB), told bne:tech.
"Foreign investors will also cancel their plans for executing projects on the territory of our country," he went on to say. "As a result, the Russian crypto
industry will lose millions of dollars, which will be redirected to other jurisdictions."
One of the biggest issues that observers have with the adopted legislation is its failure to pro- claim cryptocurrencies as a legitimate means of payment. In addition, none of the drafts provide a clear definition of cryptocurrencies or digital money. Similarly, no guidelines for crypto asset tax reporting are provided by the draft laws.
For more than a year now, senior Russian officials have been talking about digital economy and development of cutting-edge technologies, of which blockchain is an important part.
However, based on the adopted drafts, Russian legislators appear keen to embrace a digital economy but bypass cryptocurrencies, which, experts warn, isn't a good idea.
"The adoption of the drafts law in their current shape is threatening to disrupt plans for digitisation of the Russian economy," Pripachkin said. "The government's unfriendly steps could become obstacles in the way of retaining and multiplying our intellectual capital, such as blockchain developers, IT specialists, coders and visionaries."
In accordance with the draft laws, the mining of cryptocurrencies will become a legitimate activity, and miners will have to register and pay taxes. Still, clauses pertaining to cryptocurrency mining