The Ministry of Finance proposed a regulatory framework that would enable cryptocurrency transactions to be carried out through Russia’s banking system, with infrastructure to monitor and identify traders.
Crypto Regulations Instead of Ban
According to a report by local media outlet RBU on Friday (January 27, 2022), the Ministry of Finance is proposing a modality that would see cryptocurrency transactions in Russia be done through traditional financial institutions. As part of the proposal, the finance ministry wants robust customer identification protocols to accompany regulated virtual currency transactions in the country.
There were earlier reports that Russia’s central bank was calling for a complete ban of the cryptocurrency industry in the country. Apart from labeling the sector a pyramid scheme, the apex bank said that digital assets threatened financial stability and sovereign monetary policy.
The Bank of Russia also touched on cryptocurrency mining, arguing that such energy-intensive activity went against Russia’s green agenda. Interestingly, crypto mining activities thrive in the country, being the third-largest mining hub after the United States and Kazakhstan.
However, Ivan Chebeskov, who works in the Ministry of Finance as the Director of the Department of Financial Policy, opposed the proposed blanket ban on crypto. According to the official, regulation of the industry was a better step to adopt.
Chebeskov also said that the Ministry of Finance already prepared a regulatory framework and submitted it to the government apparatus. The official further said that the world was becoming “virtualized,” and it was important for the Russian government to create an enabling environment for technologies such as crypto to develop.
According to the official:
“Here it is necessary to give an opportunity to develop these technologies (mining, etc.). In this regard, the Ministry of Finance is actively involved in the development of legislative initiatives in terms of regulating this market.”
Crypto Mining Receives Putin’s Nod
While the central bank continues to maintain a hardline stance against crypto, Russia’s President Vladimir Putin has in recent days offered some endorsement of cryptocurrencies, especially the mining sector. As previously reported by CryptoPotato, Putin has argued that Russia stands to gain some “competitive advantages” from allowing crypto mining activities.
According to Bloomberg, some government sources have claimed that Putin is keen on regulated crypto mining that will utilize the country’s excess electricity supply. Russia is the world’s third-largest cryptocurrency mining destination behind the United States and Kazakhstan in terms of hash rate distribution.