Regulators are getting concerned by the number of people using Bitcoin and other cryptocurrencies. In fact, more and more countries are looking to regulate their respective crypto markets. And most of the time, it has led to panic and even a decrease in the value of top cryptocurrencies. In fact, from near $20,000 value mid-December of 2017, Bitcoin has plummeted and has floated around $11,000 by the end of January 2018. And part of the reason why it has plummeted so fast is South Korea’s restriction on cryptocurrencies.
Russian Law That Defines Cryptocurrency
The newly drafted bill on Friday hopes to clarify what cryptocurrency is for Russia. The bill made use of the term “digital financial asset” in order to describe cryptocurrency. The bill also mentioned that the digital financial is in electronic form “created using encryption methods, of which the legal title of ownership is verified by making a digital record in the registrar of digital transactions”.
Based on this draft, this makes cryptocurrency, not money. The draft bill also mentioned cryptocurrency and tokens in order to address ICOs. Tokens can be exchanged on cryptocurrency exchanges like stocks.
The Russian government has promised to take action to regulate cryptocurrencies this year. According to Anti Danilevski, the CEO of KickICO, a blockchain platform that has raised over $80 million in 2017 in their initial coin offering, “the purpose of these bills is to define the scope of action and of the regulations of cryptocurrencies, not their prohibition, and this is good news for Russia”.
Is Cryptocurrency Quasi Money?
In 2014, the Russian Central Bank has called Bitcoin as “quasi-money” and even mentioned that it was used for illicit activities from money laundering to tax evasion. According to Danilevski, “For us, as a company, it is important to act legally. So once you get a better sense of the rules, it allows projects from the real economy to launch their ICOs here, instead of doing it in other countries”.
And what about crypto mining? Good news for crypto mining, it has been called as an entrepreneurial activity that is aimed at validating transactions. And in exchange, the crypto miners are getting compensation in form of cryptocurrency. However, this would require Russian crypto miners to declare themselves as a legal entity or register as a self-employed person that offers this type of service.
However, according to the Financial Ministry, it only wants trading of cryptocurrencies to occur on licensed exchanges that have SEC licenses. This means that the bill is leaning towards the protection of crypto investors.
However, individuals who aren’t registered as qualified investors can still invest but only up to 50,000 rubles in ICOs.
This bill is still in its early stages. We can all expect that the parliament will most likely amend it to improve it or to dilute it. However, from the bill itself, crypto investors will already have an idea what Russia is after. This only means that Russia isn’t just into tight control. It is all about welcoming cryptocurrencies but with the needed precaution in order to ensure the safety of its investors.
And in contrast to other countries, Russia seems to have an open mind when it comes to crypto investing.