Russia’s President, Vladimir Putin, has issued a 5 points decree on digital currencies following a high level meeting held this October 10th. That includes, according to a rough translation:
“The establishment of requirements for the organization and implementation of production based on the principles of cryptography in the medium of distributed registries (“mining”), including the registration of economic entities carrying out such activities, and determining the procedure for its taxation.”
In effect, crypto miners based in Russia will be regulated by July 1st 2018 following the establishment of legal requirements, including registration.
This is the first time in the world a state government has in any way interfered in the business of crypto-mining, contrary to the long established position in UK and USA that regulators will not interfere with the protocol itself.
However, we will have to wait and see what exactly they will require once they publish the regulations as the high level meeting simply gives broad instructions.
Russia’s president has also ordered the creation “of a special regulatory platform (“sandbox”) for the approbation of innovative financial technologies, products and services to the establishment of rules for the regulation of relations related to their application in the financial market.”
Which indicates they are following the much heiled approach of London, so signalling in the process they intend to take a friendly approach towards this space.
But that seems to be only in some aspects because they are planning to apply IPO rules to ICOs, despite token sales being very much different and far earlier in the business stage than IPOs. They say proposals are required on:
“Regulation of public attraction of funds and crypto currency by placing tokens by analogy with the regulation of the initial placement of securities.”
But Russia appears to have some big ambitions for the use of digital currencies, Putin so instructing for the provision of proposals on:
“The formation of a single payment space for the member states of the Eurasian Economic Union with the use of new financial technologies, including the technology of distributed registries.”
They are thus seemingly planning to move full speed ahead towards the implementation of blockchain technology in finance and commerce, with broader regulations for digital currencies to be provided by July next year, Putin so requiring:
“Determination of the status of digital technologies used in the financial sphere and their concepts (including such as “technology of distributed registries”, “digital letters of credit”, “digital mortgage”, “crypto-currency”, “token”, “smart contract”) Based on the obligation of the ruble as the only legal tender in the Russian Federation.”
Which means they clearly are not going to follow Japan’s example, nor that of China, so striking a middle road of sorts between the two.
They seemingly plan to tightly control some aspects, such as mining and ICOs, while being more lenient with other innovative aspects through the sandbox.
But these are just general instructions and something might have been lost in translation. So we’ll have to wait for the final proposed regulations to better understand the mixed signals that keep coming out of Russia.