Moscow’s Bank of Russia wants to hold those who misuse cryptocurrencies contrary to the law accountable. A financial regulator proposed that legal liability be introduced for certain operations involving digital assets it considers to be illegal.
Central Bank of Russia Strives to Stop the Circulation of Deccentralized Currencies
Cryptocurrencies in the Russian Federation, as well as related activities, remain only partially regulated, mainly through the law “On Digital Financial Assets,” which went into force at the beginning of this year. Uncertain is the possibility that digital coins could be used for payment of goods or services.
CBR has been persistently opposed to accepting bitcoin or similar payments. The authority claims these are all “money surrogates” that are banned under current Russian legislation which recognizes the ruble as the only legal tender in the country that spans 11 time zones.
The CBR now wants to introduce legal liability for what it views as “illegal circulation of digital financial assets.” Remarkably, the push is part of its plans for the “creation of an enabling environment for the introduction of new technologies and support for innovation in the financial market” – two of the bank’s key “strategic directions” under the banner of “promoting digitalization.”
The proposal has found its place in the Bank of Russia’s program document titled “Main Directions for Financial Market Development of the Russian Federation” for the period until 2024. Recently, its Board of Directors approved the project for submission to the State Duma.
CBR states that federal laws must be adopted to provide comprehensive digital legal regulation of digital assets as well as utilitarian digital rights in order for innovative financial instruments to be developed. According to the CBR, another aspect of taxation that must be considered is how these transactions are affected by their rights and assets.
Bank of Russia notes further that the country is working to develop a digital version of its national currency. The introduction of the ruble’s third form, after cash and bank money, requires a string of legislative changes, the monetary authority points out. Anatoly Aksakov (head of the Financial Market Committee in the Parliament) indicated earlier that the Duma is preparing to amend 13 Russian laws to make them compatible with the CBDC.
The members have raised concerns about the potential risks that the digital currency may present to information security and the banking industry. At the same time, Bank of Russia’s Chair Elvira Nabiullina has recently stated that the new currency is what the Russians need as it will provide them with an alternative to cryptocurrencies and stablecoins while enabling cheap and reliable payments.
CBR considered a CBDC since 2018. In 2018 they decided to investigate the possibility of issuing one. The authority issued a digital ruble model in April 2021 and published an October 2020 consultation paper. This year’s June saw the creation of a pilot team with more than a dozen banks. It plans to complete the platform’s prototype in December and begin trials in January 2022.
Is the Bank of Russia likely to persuade lawmakers to impose legal responsibility for illegal use of cryptocurrency? Please let us know your thoughts in the comment section.
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