According to Russian crypto industry proponents, the current law “On Digital Financial Assets” does not go far enough.
Despite the country’s first cryptocurrency law being passed in January 2021, the cryptocurrency business in Russia is still mostly uncontrolled and fraught with uncertainty, according to a local industry advocate.
The current Russian cryptocurrency rules, according to Yury Pripachkin, chairman of the Russian Association of Crypto Industry and Blockchain (RACIB), are nothing more than “half-measures” that have nothing to do with systemic solutions.
Pripachkin mentioned Russian President Vladimir Putin giving repeated successive commands to embrace crypto law over the last four years in an interview with local news outlet RBC. The CEO noted that while the global market valuation of cryptocurrencies has increased from roughly $200 billion in 2017 to $2.7 trillion today, local authorities have done nothing to capitalize on this value.
Pripachkin stated, “Russia has done nothing to control the local cryptocurrency industry, which accounts for 10% of the worldwide crypto market.” He went on to say that the size of the Russian crypto market is similar to the $270 billion in yearly government budget income.
According to Pripachkin, Russia’s crypto law “On Digital Financial Assets” offers a legal foundation for crypto in the broad sense, but it does not define key industry concepts like smart contracts or govern operations like cryptocurrency mining, issuance, or taxes.
The Russian cryptocurrency business, according to the chairman of RACIB, is mostly a grey zone. The existing crypto regulation in Russia, according to Anna Maximenko, a counsel at the international law firm Debevoise & Plimpton, is “limited to the definition of cryptocurrency” and a few other features, such as the restriction on cryptocurrency payments.
“At the moment, other parts of cryptocurrency turnover, like as exchanges and investor requirements, are not regulated,” Maximenko explained. According to the expert, the lack of legislation results in no crypto exchanges being registered in Russia, but people may still utilize services from overseas crypto exchanges like Binance, Huobi Global, Paxful, and others.
“Given the Bank of Russia’s attitude on cryptocurrencies, it’s possible that no Russian cryptocurrency exchanges will exist, while overseas crypto exchanges will continue to exist in a grey area,” Maximenko added.
The report comes as the Russian government expresses a growing interest in cryptocurrencies such as Bitcoin (BTC), with some departments offering to mine them with related gas.