Page 11 - RusRPTFeb22

A ban on the issuance (including mining), circulation and exchange of cryptocurrencies (including stablecoins). This would affect crypto-exchanges and peer-to-peer (P2P) platforms.
A ban on banks investing in cryptocurrencies or related financial instruments, and a block on using Russia’s financial infrastructure for any crypto-operations. This means a halt to all the operations of exchange-traded funds (ETF) for cryptocurrencies, as well as customer payments to crypto-exchanges.
Penalties for companies and individuals that make crypto-payments. Miners are likely to be dealt with separately, but no specific punishments were proposed for them.
NFTs and digital currencies issued by Central Banks remain unaffected. Importantly, the Central Bank does not intend to ban ownership of cryptocurrencies nor investing in them via foreign jurisdictions.
At present there are no restrictions on cryptocurrency mining in Russia (although the authorities are planning to raise the energy price for those taking advantage of subsidized electricity to produce crypto at home). Officially, it’s forbidden to use cryptocurrency when buying or selling goods or services, but this is not usually punished in any way.
The Central Bank stands alone
It’s far from certain that the Central Bank’s proposals will become law. About nine agencies are involved in regulating the crypto-market, including the Finance Ministry, the Federal Tax Service, financial watchdog Rosfinmonitoring and the Federal Security Services (FSB). Only the Central Bank is insisting on a strict ban, according to The Bell’s sources.
For example, Rosfinmonitoring just wants to control the flow of funds from crypto to traditional assets, while the Finance Ministry wants to protect unqualified investors.
A complete ban on cryptocurrency in Russia is supported by the FSB as it seeks to block funding for opposition groups and independent media, according to reports from news agency Bloomberg. However, The Bell’s information suggests otherwise. Crypto regulation has been under discussion for some years and The Bell’s financial market sources have never said the FSB takes a hard line — there have even been hints that security officers who control informal money flows may have their own reasons to want to avoid strict regulation.
What’s it for?
The Central Bank gave a long list of reasons why it wants such tough measures. The big one is the risk to individual investors, who have already purchased cryptocurrency at a rate of $5bn a year. Crypto-investments are easily lost due to volatile exchange rates, fraud, hackers or market manipulation and there’s no protection for investors. An increased role for cryptocurrency in the economy could render the Central Bank’s monetary policies less effective, pushing up interest rates, which would slow the growth
11 RUSSIA Country Report February 2022 www.intellinews.com