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Law on Digital Financial Assets Considered in Russian State Duma

Anatoly Aksakov, the current Chair of the State Duma Committee (the lower house of the Federal Assembly of Russia) on Financial markets, together with a group of other Russian deputies have submitted a draft, federal law regarding initial coin offerings (ICOs) and cryptocurrencies regulation to the State Duma. This is according to a report on March 20th through an official press release.

The press release detailed how documents on crowdfunding and digital assets were prepared according to the recent instructions from president Vladimir Putin. It stated that regulations on cryptocurrency would come to effect as from July 1, 2018.

The bill on digital assets

Notably, Jan 25 was the first day that the bill on digital assets was conceptualized through the Russian Ministry of Finance. It makes a definition of tokens and cryptocurrencies as digital financial assets. This means that they could only be allowed to trade under the confines of authorized cryptocurrency exchange operators.

According to the document’s current version, digital assets are recognized as property.  It, therefore, stresses that it is not a legal means of payment within the Russian territory. Veselin Petkov, a financial analyst, reckons that the current version of the bill has one significant difference from the one being fronted by the finance ministry.  Notably, the current version makes an effort to establish KYC regulations to help in customer identity verification on cryptocurrency exchanges.

Echoing the United States

According to a report by Cointelegraph on Feb 24, about 1300 customers on Coinbase had their data handed over to the United States Internal Revenue Service(IRS). It would also be noted that on Dec 27, 2017, Poloniex, one of the main crypto exchanges announced to the effect that they would need all accounts to undergo verification. Concerning this development, therefore, Petkov is of the opinion that the new legislation will go hand in hand with the United States’ regulations on cryptocurrencies.

One basic requirement by the Russian bill is that the operator will have to open a digital financial asset exchange but only after going through the procedures laid out regarding the identification of the owner according to the Federal law. This is one of the efforts made to help combat terrorism financing and money laundering.

The new bill’s version also features distinct difference regarding ICOs. Before, the suggested maximum amount of investment was 50,000 rubles ($900). However, the new version suggests that the Central Bank of the Russian Federation has the sole prerogative to determine the maximum limit of investment, especially for unqualified investors.

January saw some disagreements erupt between the CBR and the Ministry of Finance, according to a report by Cointelegraph. Their primary cause of the conflict was on whether trading of cryptocurrency should be accepted. The disagreement has however since been solved according to Ria Vovotsi. This means that the CBR is now in the driving seat of the country’s cryptocurrency exchange.

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