Russia’s President issues orders about fintech and cryptocurrencies

Maria Nikolova

Vladimir Putin gives the Central Bank of Russia and the Russian government until July 1, 2018, to change Russian legislation so that it determines the status of DLT, cryptocurrencies, smart-contracts and tokens.

Russia’s President Vladimir Putin has made his stance regarding cryptocurrencies much clearer by signing a number of orders to the Central Bank of Russia and the Russian government with regard to fintech and cryptocurrencies.

The Government and the Central Bank have until July 1, 2018 to make sure that certain changes are introduced to the Russian legislation. These changes should determine the status of digital technologies used in the financial segment and should cover the associated concepts, including: distributed ledger technologies, cryptocurrency, token and smart-contracts. These changes should reflect the fact that the Russian ruble will remain the single legal payment means in the Russian Federation.

The legislative changes should cover mining and the way this activity should be taxed. The registration and regulation of the entities executing such activities should also be specified in the legislative changes.

The changes should also address the funding using tokens.

A sandbox should be launched for the approbation of innovative fintech solutions.

The detailed orders are published about a fortnight after the Russian President voiced his concerns about the use of cryptocurrencies. He emphasized that there is a risk of using them for money laundering, tax avoidance and financing of terrorism. Mr Putin also stressed that there is no legally responsible entity behind cryptocurrencies, and this means that in case the “bubble bursts”, there will be no one to protect investors.

Nevertheless, he noted the importance of finding the right way to use novel technologies in the banking sphere.

Mr Putin’s comments broadly reflect the stance of the Central Bank of Russia, which has also been very critical with regard to cryptocurrencies. The regulator has issued a stark warning with regard to Bitcoin and its likes in September this year. Moreover, the central bank has criticized the cryptocurrency-related activities of the MFB Clearing Center, which had presented a new set of clearing rules on its website, including ones covering clearing of off-exchange electronic contracts for cryptocurrencies. The Bank of Russia demands that MFB removes the rules associated with these contracts and presents the redacted version to the regulator.

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