New Law Project on Digital Financial Assets Will Not Allow Exchanging Cryptocurrency to Rubles

Published on 21 Mar. 2018
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The new law project on digital financial assets has been presented in Russian Duma. This is the same modified document which has been already discussed in January and about which we’ve written in our publications. The material consists of five articles, one of them is devoted to the definitions of mining, cryptocurrencies, tokens, smart contracts, and digital wallets.

The previous edition of the project was sharply criticized by the crypto community, and Boris Titov, RF Presidential Commissioner for the Rights of Business People, said that the offers of the Ministry of Finance were stricter than in any other countries that adopted at least some legislation on cryptocurrency functioning.

In the new document, mining is considered as the entrepreneurship if an individual who is involved in it, exceeds the limits of energy consumption for three months in a row. The limits are set by the government, mentions the project.

The first version of the law project, suggested by the Ministry of Finance, stated that mining unequivocally is entrepreneurship. It practically means that miners will have to pay taxes.

The law project is offered by the group of deputies, with the head of the Financial Markets Committee Anatolii Aksakov as the leader. Also, the Ministry of Finance and the Central Bank of Russia were involved in the project development.

So, the payments with digital financial assets (DFA) will be illegal on the RF territory. Tokens and cryptocurrencies will be considered as mine. Cryptocurrency will be defined as a kind of digital asset which is created and included to the register according to the algorithm, and a token is DFA that is released for fundraising, and only its status is included to the blockchain. Namely, cryptocurrency is mined, and tokens are emitted within the limits of ICO.

The new project offers to allow exchanging rubles and foreign currency for tokens only. Aleksandr Kitchenko, investor and employee of Bitcoin Foundation has commented the new edition of the law project:

It looks like we will have to register on two exchanges – Moscow’s and St. Petersburg’s – and there, under the state’s control, one will be able to exchange cryptocurrencies for rubles. The point about tokens exchange only will be revised and refined.

One more topic of discussion around the new project has been the question of letting the unqualified investors access the ICO. The project presupposed the investment limit of 50 thousand rubles for them; the new edition doesn’t have this point.

The representatives of the Russian Association on Cryptocurrencies and Blockchain have some remarks to the new project, especially to the part about mining as entrepreneurship. The president of Association, Yurii Pripachkin commented:

Crypto industry is decentralized and not inclined to regulation, as legislators want it. They think it can be regulated similarly to gas or oil industry. It’s delusion. One can only create the conditions for development in one or another jurisdiction. 

Market members fear that none of the active blockchain systems or cryptocurrencies will be able to work within the limits of this law. ICO organizers can be scared off by the complicated conditions of ICO launching: the necessity to describe the rules of keeping register; to sign up the investment memorandum by the reinforced qualified commission with the signature of CEO; provide the copies of memorandums for storage in the depositary.

In the experts’ opinion, such option of regulation loses to legislations of Singapore, Switzerland, Estonia, and Belarus, where they talk about industry development at the first place, and then about its control.

One should remind that the Ministry of Finance plans to introduce criminal liability for circulation of cryptocurrencies as means of payment. 

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