Crypto owners will soon be required to submit their token information for identification purposes id a bill is passed successfully in the State of Duma. The operations with digital tokens will be required to pass a special identification process although the specific definition of that tool in the legislation still does not fix most of the existing pertinent issues.
In the wake of huge money laundering scandals in the region, Russian authorities aim at taming the vice. They will do so by introducing new rules and regulations that are expected to bring sanity in the murky waters of cryptocurrency. This is not the first time that Russian regulators aim at controlling the crypto markets. In February, they urged the State of Duma to quicken the digital assets regulation process.
It is important to control the laundering of any income that is directed towards the cryptocurrency market. Thus, amendments are necessary for the current bill on digital financial assets that is scheduled for the second reading in the State Duma. The chairman of the State Duma Finnish Market Committee, Anatoly Aksakov, was speaking to Izvestia when he made the announcement.
Moreover, he explained that the crypto tool will also have to undergo a series of tests for compliance with the Russian legislation requirements. Any tool that is not tested when the law is passed will be considered illegal. Market participants and commentators welcomed the move to introduce mandatory identification terming it as a step in the right direction for it will contribute to the recognition of cryptos promoting mass adoption.
Users will need a special ‘visa’ to transfer money from Russian bank accounts into digital financial assets, especially digital tokens. Anatoly Aksakov explained that such permission will only be issued when users pass the set identification standards. The mechanism to be used and the body to conduct the identification process is yet to be determined.
Also, the draft law on the Central Aesthetic Fundamentals will be extensively integrated with the current legislation on combating money laundering incidents. Anybody caught breaking the law will be punished with 15 years in prison. Making any transactions with unidentified participants will also be considered as a sign of illegal schemes.
The audit is expected to resemble the listing of various securities on traditional stock exchanges although it will be a simple and cheap process. Any private crypto tools that do not abide by Russian legislation will become illegal. The Finance Ministry finds it prudent to introduce identification for cryptocurrency users to enhance confidence in the new volatile markets.
Izvestia was informed that the new mechanism will be expected to minimize risks of countering money laundering and corruption in Russia. The first reading of the draft on digital financial assets law was adopted at the end of May 2018. The second reading is expected sometime later in 2019.
Simultaneously, the bill states that the CFA are not yet recognized as legal tenders in Russia and the ruble is still the only means of payment. Additionally, the document in question offers for the possibility of making transactions on the exchange of cryptos for foreign currency of fiat money.
The Proposed Law
There is no specific definition for ‘cryptocurrency’ is planned at the legislative level. The document only highlights the value of digital financial assets. According to Artem Koltsov, if these amendments are adopted, the industry participants will be required to work under Russian jurisdiction. Artem is the head of the expert council focusing on the digital economy and blockchain technologies operating under the State Duma.
Citizens and companies will then work “in white” and legally withdraw money as it is the case in Switzerland. In April 2018, the European Parliament approved new measures to combat all money laundering activities. In that connection, all cryptocurrency exchanges and wallets operating in the EU countries must introduce mandatory identification of customers.
The vice president of the Russian Association of Crypto-industry and Blockchain, Valery Petrov, believes that this special identification for market participants will help the crypto industry. It will contribute to the secret recognition of digital tokens as an equivalent of fiat money leading to the development of the investment market using blockchain.
Nonetheless, the effects of this law on the Russian crypto industry will only be experienced when lawmakers decide on the most viable amendments on the crypto concept and the limits of its application. If the final draft is not loyal to the stakeholders, these new amendments will result in a negative effect on the nascent industry.
The Unregulated Crypto Market Cost the Russian Federation Economy $2 Billion
As far as cryptocurrency regulation in Russia is concerned, in as little as one-and-a-half years, the Russian economy is reported to have lost approximately $2 billion as a result of the unregulated cryptocurrency market. This information was published in the press service of the Russian Association of Cryptocurrencies and Blockchain (
Earlier in February 2019, Russian VTB bank head compared crypto mining with money printing. According to the president of VTB bank, there will remain a rather narrow niche in which the cryptocurrency will be used.