The Russian Ministry of Finance has revealed some details of the upcoming bill to regulate cryptocurrencies which the ministry has been preparing in collaboration with the central bank. The ministry is considering restricting cryptocurrency mining and penalizing crypto payments as well as prohibiting token sales on the secondary market.
The clock is ticking for the finance ministry to submit its proposal for the regulatory framework for cryptocurrencies in Russia. President Vladimir Putin wanted the proposal finalized in December to be implemented by July of next year.
“We are now preparing the bill, we have an order to submit it in December, of course, we will fulfil this task,” Deputy Finance Minister Alexei Moiseev told Tass on Wednesday. “We are actively working together with the central bank and the State Duma Committee on Financial markets, the concept is already generally agreed upon,” he added.
According to RT, the finance ministry has proposed penalties for cryptocurrency mining activities. Moiseev was quoted saying:
The penalties will be different, mostly administrative, but if someone creates cryptocurrencies for the purpose of settlements, then there will be a criminal punishment.
In addition, he said: “Criminal penalties can also be applied to the creation of a financial pyramid or the issuance of a cryptocurrency to avoid tax.” The ministry earlier suggested introducing mandatory registration of cryptocurrency miners and only to allow legal entities and individual entrepreneurs to participate, news.Bitcoin.com reported in October.
The trading and mining of cryptocurrencies, including bitcoin, is not regulated by Russian laws presently. However, Putin has ordered the government to create legislation for cryptocurrencies, including determining their status and creating a legal framework for both crypto mining and initial coin offerings (ICOs).
Prohibiting Crypto Payments
The Ministry of Finance is also reportedly preparing an amendment to punish those making payments in cryptocurrencies, Moiseev also revealed.
Citing the means of payment is the ruble, based on the Russian constitution, Moiseev noted that “it is illegal to use cryptocurrency for these purposes,” Ria Novosti reported. “The state should punish the payment of purchases using cryptocurrency,” he said. However, he emphasized that “no one is punished for buying cryptocurrencies.”
Following Moiseev’s announcement, experts told the publication that “the authorities will have to solve the most complicated task: to explain why you can pay for purchases with ‘bonuses’ on bank cards or ‘miles’, but cannot with bitcoin.” Economist Maxim Blunt commented:
Ways to circumvent these prohibitions are massive, can you pay with accumulated points in eateries or coffee shops? Then all of them should be on the bunk next to Gref.
The reference was to Sberbank’s president Herman Gref who publicly admitted that he bought a T-shirt using bitcoin a few years ago. His bank also recently admitted to having bought almost all of the graphics cards on the Russian market but did not say whether they were using them for cryptocurrency mining.
Restricting ICO Token Sales
Moiseev also announced, as reported by Tass, that the finance ministry proposes to limit the turnover of ICO tokens. He elaborated:
We regulate the ICO in essence as a form of crowdfunding in the sense that people who participate in the ICO could pay with any currency, including cryptocurrency, but the turnover of these tokens in any format will be banned except for transfers to the issuer.
He said the agency plans to protect ICO investors. “If the person who bought these tokens considers that he was deceived, he will have the opportunity to go to court,” he detailed.
The deputy finance minister also clarified that the draft law being prepared “does not provide for control over digital currency by an industry self-regulating organization (SRO).”
What do you think of the finance ministry’s proposals? Let us know in the comments section below.
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Author: Kevin Helms