Russia Takes Steps to Regulate Cryptocurrency With Draft Law for Managing Digital Money Creation and Management

On Thursday, 25^th January, Russia made a move to regulate cryptocurrencies by providing a draft law. Its objective was to manage the formation and production of virtual money. Authorities have reacted to this with fascination as well as mistrust. The law, that still requires to be certified by the state and presented to parliament is to ‘offer an explanation on digital technologies utilized in the economic sector,’ stated the Russian finance ministry in a report published on Thursday. Russia, similar to other governments, has become immersed in the developing bitcoin trend and other virtual currencies not supported by states or central banks, whose use in buying services and products on the internet is growing.’

Russian authorities have for a long time regarded virtual money skeptically. They currently acknowledge its power and have begun providing an authorized foundation to virtual currencies such as bitcoin. According to the ministry, ‘the regulation is going to ‘facilitate a great decrease in the danger posed by fraud,’ and assist to form a clear tax system for cryptocurrencies procedures. It will make the tax revenues rise.’ To show that it will be hard to create a structure like this, the finance ministry indicated there was a conflict with the central bank of Russia whose stance on virtual currency is stricter.

The finance ministry is adamant that due to the fame of cryptocurrencies, a method which is too stringent would lead to them being utilized to finance terrorism and on the black market. Also, the proposed bill presents regulations on firms collecting money with cryptocurrencies, such as what is known as Initial Coin Offerings (ICO), which regulators have handled recently. In these dealings, a group forms its virtual currency and collects money by selling it to investors. The investors use other virtual currencies to pay, or lately, with conventional currencies.

The draft law in Russia is the newest among numerous proposals to regulate the international wonder. The previous week, Germany and France declared they plan to form a combined proposal on bitcoin regulation at a finance ministers meeting in March from the G20 states. Their assurance of setting up regulations was made when the bitcoin value rose drastically, increasing from US$10,000 to almost US$20,000, and then decreased to US$10,000 in a span of two months as speculators came forth then Chinese and South Korean authorities investigated cryptocurrencies.