A new bill on virtual financial assets has now been submitted to the Russian parliament.
It is dedicated to regulating the use of cryptocurrencies and mining activity in Russia.
The law was drafted by a group of officials under Anatoly Aksakov, chairman of Russia’s Financial Market Committee.
The new bill defines such digital financial assets as “cryptocurrencies” and “tokens.” It is stated that cryptocurrency and tokens are digital property.
Cryptocurrencies As Securities
In the bill, it is determined that cryptocurrencies cannot be used as a means of payment in the territory of Russia because all purchases in the country are paid in the national currency—Ruble.
In accordance with the Russian Constitution, Ruble is acknowledged as the only official method of payment. Thereafter, the Central Bank of Russia refuses to amend regulations in fear of competition from cryptocurrencies.
Moreover, the government is careful not to lose control over funds and money supply. In fact, cryptocurrencies and tokens are equated with securities.
All cryptocurrency transactions are to be carried out by operators of digital financial assets exchanges. In particular, the bill allows citizens to exchange tokens using special operator services, which must have a license for brokerage and dealer activity.
Authors of the legislative initiative suppose that this measure will help protect inexperienced investors from fraud, while also counteracting money laundering and terrorist groups’ financing.
The set amount of cryptocurrencies and tokens involved in a given purchase is not limited yet. However, the Ministry of Finance specifies the following limits for unqualified investors: 50,000 Rubles (about $900) for a single transaction and not more than 500,000 Rubles a year.
The bill also regulates the cryptocurrency mining industry. It offers to recognize mining as a business activity.
In this case, only sole proprietors and legal entities will be authorized to mine cryptocurrencies. Clandestine miners will be detected with the help of energy consumption limits.
Citizens who repeatedly exceed these limits within three months will be held under suspicion and if their illegal mining is proven, they will be fined for illicit business activity.
The Russian Association of Cryptocurrency and Blockchain (RACIB) criticizes the law, saying that its provisions will result in miners’ outflow.
Yury Pripachkin, head of the RACIB, stated that the organization disagrees with the term that mining is a business activity. In fact, Pripachkin noted, mining is a way to produce certain program codes, which do not have any value and do not participate in any economic activity. Taxation makes sense when cryptocurrencies are converted to dollars or other fiat money.
The restrictions, as stated by the law, prevent both the development of cryptocurrencies in Russia, as well as foreign investment in the country’s economy.
Pripachkin also stated that in order to avoid ruining the crypto market during establishment phase, it’s necessary to agree on terms and conditions. Furthermore, it will be necessary to accept a single set of rules regulating cryptocurrencies, common for all members of the Eurasian Customs Union.
Although, several members of the Eurasian Customs Union have already adopted laws on cryptocurrencies. For example, in December 2017, cryptocurrencies were officially legalized in Belarus.
According to the bill, digital money can be mined, sold and bought without paying taxes. Moreover, Belarusian government allowed exchanging cryptocurrencies for other currencies. Thus, Belarus became the second country in the world to recognize digital assets along with its national currency.
Should Darknet Market Users Worry?
Note: The following predictions are the author’s opinion and not necessarily that of Dark Web News.
Rising Fees and Security Issues
The bill lets only authorized operators to exchange cryptocurrencies and gives the government the right to license them.
Obviously, exchangers, which are not certified, will be blocked by a court’s decision.
This will reduce the number of exchanges, which, in its turn, will lead to decreased competition.
Licensed exchangers are likely to increase transaction fees and their rates will be overestimated in comparison with the official ones. The blocking can be bypassed with the help of VPN software or the Tor browser, giving the customers access to unauthorized exchangers.
The cryptocurrencies legislation encourages citizens to use certain services, authorized by the government and clearly collaborating with it. This gives legal enforcement agencies better control over transactions, allowing for the likelihood that users may be deanonymized.
Need for IDs
The bill brings amount limits against dark web vendors. They will not be able to cash more than $9,000 a year using accounts registered on the same person. Instead, sellers will have to open several accounts using different IDs.
You can guess their required number by the fact that a reputable dark web shop may have a daily flow of income reaching $10,000.
It Could Be Worse
The situation is not as grave as it could be. Illegal mining will not be considered a criminal offence, as deputies previously offered. Also, it is not clear how authorities are going to “prove” mining activity. Will the suspects’ homes be raided?
Cryptocurrencies will eventually get a legal status in Russia. Yes, their turnover will be regulated to some extent, but people will be able to sell and buy them legally.
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