On Jan. 26, the center for innovations and technologies Digital October in Moscow hosted a conference dedicated to the Regulation of Cryptocurrencies in Russia.
The event welcomed more than 250 participants – founders of Fintech startup companies, businesses interested in the integration of Blockchain technology into their operations, members of the Blockchain community and state authorities who are keeping their eyes on the trends in the development of this still bizarre phenomena.
Within the last few years, the problems surrounding the regulation of cryptocurrencies in Russia has been discussed many times. State authorities have gone from an intention to ban cryptocurrencies completely and impose legal sanctions to all involved in transacting with cryptocurrency to an initiative to create an offshore cryptocurrency zone.
In November 2016, the Federal Tax Authority published its first document addressing the issues surrounding the regulation of cryptocurrencies.
In December 2016, Deputy Chairman of the Bank of Russia Olga Skorobogatova announced that the bank was planning to suggest a few changes to national legislation in order to facilitate the process of development and integration of new technologies, including financial technologies and Blockchain.
A few days later, Deputy Finance Minister Alexei Moiseev said that the Ministry of Finance was expecting an enactment of a bill banning exchange operations with the national Rouble and cryptocurrencies, no earlier than in the Autumn of 2017.
In January this year, however, we have seen an announcement from the Central Bank of Russia and the Russian Financial Monitoring authority that cryptocurrencies do not represent a threat, therefore, it would not be fair to rush the ban of something which has not been explicitly studied, and instead observe the international practices in this field.
As a result of all these rather confusing statements, the legal status of cryptocurrencies in Russia remains unclear. Therefore, the main objective of the conference was to shed light on the current state of regulation of digital currencies and create a platform for discussion, as there are numerous questions to be answered.
From strict ban to discrete permission
Legal Consultant at Deloitte in CIS countries Ksenia Osipova opened the conference with a brief overview of how the attitude of state authorities towards cryptocurrencies has been changing in the last few years. Thus, within the last three years, the general mood of regulators has changed from strictly prohibitive to discretely permissive, which is demonstrated by the recent open letter from the Federal Tax Service discussing the status of cryptocurrencies. Generally, the letter says that everything, what is not prohibited, is allowed. Osipova explained:
“The very fact that this general idea was delivered in an open letter, rather than in an official resolution is very relieving. According to the letter by the Federal Tax Authority, we can conclude that, first, cryptocurrency transactions are not prohibited, and second, that cryptocurrencies are not defined as quasi-money, which was discussed last year.”
Moreover, the letter mentions the similarity between cryptocurrencies and traditional currencies and compares it to currency valuables. The latter represents a unit which can be used for transacting. Osipova said that we can expect the introduction of official regulation policies in the near future, which would address issues related to the use of cryptocurrencies for illegal purposes and money laundering.
Too scared to take initiative
Elina Sidorenko, the head of the working group at the State Duma exploring digital currencies, explained that to this moment, state authorities decided to take a break and look at how other countries are dealing with this issue, so as not to provoke any adverse effects from hasty initiatives.
“Everyone is waiting for others to make the first move.”
Sidorenko agrees with Osipova in that we will see the introduction of official regulation policies addressing cryptocurrencies and Blockchain initiatives most probably by the end of this year.
Generally, Sidorenko emphasized the warming and liberalization of regulator’s attitudes towards cryptocurrencies. She explained that nobody intends to completely ban the use and operations of cryptocurrencies, however, there are many nuances that should be cleared up in order to ensure that the existence of cryptocurrencies in Russia is secured from a legal point of view:
“Technology cannot exist in a legal vacuum, to ensure its development we need to create a space of legitimate freedom for it.”
Speaking about the regulation of Blockchain, Sidorenko said that soon we will see the development of the model of standardization. In this case, Sidorenko said that nobody is talking about the introduction of bans and restrictions but that it is more about verification, standardization, licensing and defining areas of responsibilities.
Who is interested in shutting Bitcoin down?
Alexander Ivanov, founder and CEO at Waves, discussed the experience of other countries in regulating cryptocurrencies. Speculating further, he suggested that it is even possible to shut down Bitcoin – with enough resources and strong political will.
However, to this day, no one sees any interest in doing so. Ivanov said that Bitcoin is officially restricted only in Iceland, Ecuador and Bolivia, while other countries are trying to define the status of cryptocurrencies and find ways to deal with them.
Ivanov also announced the establishment of the first Russian consortium of Blockchain businesses. Waves and financial group Solvena are among the members of the consortium. Viktor Nasochevsky, the founder of the payment system Rapida, has been announced as the chairman of the consortium.
Dimitry Bulichkov, head of the Center for Technology Innovations at Sberbank, gave some hints…