The Russian government's hostile attitude to cryptocurrency has been cemented by the country's Central Bank, which laid out its vision for crypto regulation - but even the parliamentarian charged with drafting legislation for the industry is dissatisfied with how slowly things are moving.
Last week, the head of Russia's State Duma's Committee on the Financial Markets Anatoly Aksakov revealed that proposed crypto legislation – which was to be voted on in the Duma before the end of 2021 – will most likely not see the light of day prior to spring 2022.
The delay stems from a contentious deadlock between the Central Bank and other anti-crypto regulatory and government voices, as well as pro-business advocates in the government, who want a more pragmatic strategy.
The Central Bank has previously stated its support for a China-style blanket ban. However, according to Tass news, the bank may be prepared to consider some sort of compromise.
Instead of imposing a (most likely totally ineffective) crypto blackout, the bank appears to favour letting Russian citizens and businesses trade and store cryptocurrencies, so long as they're not handled by domestic firms. Russia-based brokers and commercial banks would be excluded from the equation as well.
The Deputy Chairman of the Central Bank, Vladimir Chistyukhin, was quoted as telling Duma's reporters, “I think that we will resolve the issue [of crypto] by amending legislation. There will be a more precise definition of how cryptocurrencies can circulate.”
According to Chistyukhin, the Central Bank is now working on a report that will go deeper into how it sees cryptocurrency fitting into the financial landscape.
Chistyukhin stated, “The report will contain our stance as to the place we see for cryptocurrency in the Russian financial market. I will give [you] a hint: We do not see any place for cryptocurrency in the Russian financial market.”
The Russian crypto market was undoubtedly unimpressed by this announcement, having heard many similar comments from the bank and its arch crypto-skeptic Governor Elvira Nabiullina before. The governor has previously stated that domestic banks should avoid dealing with cryptocurrency-related activities.
However, it appears unlikely that Nabiullina and her team will be successful. Many of Russia's wealthiest individuals have made significant cryptocurrency investments, according to multiple sources in the Russian cryptocurrency sector.
Furthermore, many company executives have identified raw materials tokenization and crypto mining as fast-growing industries, declaring that they will not allow the Central Bank to take control.
Even Aksakov appears to have had enough, urging the government to stop discussing crypto and start working on finalizing regulatory legislation.
So far, almost half a decade of discussions has resulted in only one law – dubbed by Russian crypto experts as simply a glossary of crypto words – which nevertheless prohibited the use of cryptocurrencies in payments.
According to RBC, Aksakov said that the government thinks that Russians have invested around USD 67.6bn in crypto thus far. The Central Bank last month claimed that Russian citizens were transacting $5 billion a year in cryptocurrency.
He also stated that retail investors are also interested in cryptocurrency, at a parliamentary hearing. Furthermore, in an atypical dig at the government, he “called for an end to the issue of cryptocurrency regulation." Aksakov continued, saying that “the authorities need to determine their position on digital assets and legislate on the matter.”
But the situation appears to be persisting into the next year, no matter how much aggravation it causes.
Deputy Finance Minister Alexey Moiseev was quoted by Finmarket as saying that there was “still no full agreement regarding the regulation of cryptocurrencies.” He continued, stating that Moscow “still has several questions on which we have not come to an agreement," with respect to the “development of the financial market of the Russian Federation." "One of these questions is, ... of course, the question of the regulation of cryptocurrencies."