On 8 February 2022 the Russian Government approved the Concept for Legislative Regulation of Mechanisms for Organizing the Circulation of Digital Currencies (the Concept). Developed by Russia’s Finance Ministry, the Concept is intended to integrate digital currencies into Russia’s financial system.
Experts reacted favorably to the approval of the Concept, as the use of digital currency in other countries is accelerating and failure to regulate the area is predicted to help the shadow market grow.
The Concept states that digital currency transactions will go through digital currency exchange system organizers (Organizer). These will be Russian banks holding universal licenses.
Organizers must have an IT system and software supporting digital currency transactions.
Transactions will involve digital currency exchange operators (Operator). For example, digital asset exchange services (“crypto exchanges”). Only Russian legal entities that comply with licensing requirements may be crypto exchanges. A list of Operators will be created and regulated by the Central Bank.
It will become possible to exchange digital currency for cash, and cash for digital currency via an Operator. Information about all transactions will be transmitted to the Organizer and transactions will not be anonymous.
The Concept proposes to distinguish between qualified and unqualified investors. Qualified investors will have more than six million rubles in assets, the relevant experience and other qualifications. Banks will set limits on transactions to protect unqualified investors’ rights and interests.
Foreign exchanges will be allowed to work with digital currencies in Russia, provided they open a Russian representative office and enter into a contract with an Organizer (a Russian bank). Funds can be withdrawn from the exchange only to the customer’s digital wallet associated with the Organizer.
The Concept also addresses IT system security. It proposes using the “Transparent Blockchain” service that can detect illegal digital currency transactions. Parties to transactions will be identified using online open-source data, social media and the Darknet.
Multiple agencies will regulate Russia’s digital currency market: the Central Bank, the Finance Ministry, the Federal Financial Monitoring Service, the Ministry for Digital Technology, Communication and Mass Media, the General Prosecutor’s Office and the Federal Tax Service.