‘On Digital Financial Assets’ provides legal standing to cryptocurrencies but fails to regulate crypto mining, exchanges, insurance and taxation
Yuri Pripachkin, the President of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (RACIB) criticised the inadequate cryptocurrency regulations in Russia, stating that the unstable regulatory environment is leading to increasing uncertainty in the local crypto markets.
In an interview with Russian news agency RBC, Pripachkin pointed out that while crypto market capitalisation in the country has increased from around $200 billion in 2017 to around $2.7 trillion now, the mandates regarding crypto regulation adopted by President Vladimir Putin has done nothing to capitalise on the growing value of the markets.
Russia adopted its first cryptocurrency law titled ‘On Digital Financial Assets’ banning the use of digital assets as a medium of payment in January 2021. Pripachkin stated that though the law provides a legal basis for crypto, it excludes significant industry terms like smart contracts and fails to regulate crypto mining, insurance and taxation.
He further explained that the existing framework is a combination of “half-measures” and does not offer systemic solutions to the challenges faced by the emerging industry. “Russia has done absolutely nothing to regulate the local cryptocurrency market, which accounts for 10% of the global crypto market,” the RACIB President said.
The resentment against the Russian administration for failing to effectively regulate and stabilise the uncertainty in the market is not unpopular. Anna Maximenko, a counsel at the international law firm Debevoise & Plimpton told CoinTelegraph that the crypto regulation in Russia is limited and does not set guidelines for exchanges and investor requirements.
This means that no Russian crypto exchange is regulated, forcing residents to use foreign crypto exchanges like Binance, Huobi Global, Paxful for their crypto-related services.
“Taking into consideration the Bank of Russia’s negative stance on cryptocurrencies, it may well be the case that there will be no Russian crypto exchanges, while foreign crypto exchanges will stay in a grey zone,” Maximenko said.
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