Russian Authorities Criticized over Proposed Crypto Regulation

Economy & Regulation

Criticism aimed at authorities and the new legislation on “digital financial assets” is mounting in Russia. Local officials have rebuked lawmakers in the capital over slow progress, warning that the country will have to catch up with others. Experts from the crypto sector have expressed concerns about many unresolved issues in the proposed legal framework. Russian deputies are preparing to introduce two drafts on cryptocurrencies and crowdfunding, while more than 50 other digital economy bills are pending in parliament.

Also read: Russia’s Longest-Serving Finance Minister Backs Crypto “Self-Regulation”

Hurry Up or Catch Up

“Russian parliamentarians have spent a whole year discussing regulations, never reaching a unified stance on a concept to develop the digital economy. Authorities and entrepreneurs have not been able to formulate a consolidated position on cryptocurrencies”, a local official said during a meeting in the State Duma. “We need to hurry up”, Alexandr Brechalov, head of the Russian republic of Udmurtia, told deputies in the federal assembly.

Russian Authorities Criticized over Proposed Crypto RegulationLike many of his colleagues in other Russian regions, Brechalov sees many opportunities for development in the crypto sector. His republic is home to large industrial enterprises, including IZHMASH – the machine-building concern producing AKs, drones and robots for the Russian military. Digitalization would boost other sectors of the local economy and the governor has an idea in that respect. “I heard suggestions about pilot projects. Udmurtia is ready to be the sandbox”, Brechalov said, quoted by RBC.

The young politician sharply criticized bigwigs in Moscow for their “excessive caution that once again puts us in the position to catch up”. He thinks the proposed legislation does not provide guidelines for the development of the crypto economy. It also leaves several issues unresolved, including the regulation of crypto exchanges and the taxation of cryptocurrency transactions. The governor thinks ICOs are over-regulated and that may force companies to look for other jurisdictions.

The Use of Crypto Technologies Limited

Some of Brechalov’s comments are echoing concerns expressed recently by several legal experts working in the Russian crypto sector. The lawyers told Bitsmedia that the law prepared by the Finance Ministry needs serious revision – if adopted in its current shape and form, many questions would remain unanswered.

The experts admit they cannot figure out what legal rights and obligations market participants have. The criteria to determine if a digital coin is legal is also unclear. Lawmakers have provided guidelines for ICOs but have not defined the status of tokens. Smart-contracts have been treated like ordinary contracts in the new legislation, but no such term exists in the Civil Code.

The draft law proposed by “Minfin” deals mainly with ICOs, instead of providing a solid basis to regulate decentralized ledger technologies, the lawyers said. It actually limits the use of crypto technologies in other spheres, they added.

The Fate of Bitcoin Undecided

Russian Authorities Criticized over Proposed Crypto RegulationThe fact of the matter is that Russian authorities have not yet decided what to do with cryptocurrencies like bitcoin. The Central Bank of Russia has insisted on banning their circulation in the country, quoting concerns over money laundering. However, the draft presented by the Finance Ministry in January reads that citizens can buy and sell cryptos and tokens on licensed platforms, like cryptocurrency exchanges.

The chairman of the Financial Market Committee in the Duma Anatoliy Aksakov said its members were trying to speed up the legal process, RIA Novosti reported. “We have two bills, on digital financial assets (cryptocurrencies) and on crowdfunding (ICOs), which are ready. We are closely working with the government and the Central Bank to quickly take the necessary decisions in the Duma”, Aksakov stated.

No less than 50 bills dealing with different aspects of the digital economy are pending in the Duma, the deputy revealed. “We understand this is very important for the business and the state, for reducing costs and increasing labor productivity”, Anatoliy Aksakov added.

Do you think public criticism will speed up the adoption of cryptocurrency regulations in Russia? Tell us in the comments sections below.

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