Sunday, February 5

Regulation proposal in Russia: only banks could exchange bitcoin


Key facts:
  • President Vladimir Putin spoke out in favor of Bitcoin mining in Russia.

  • The Russian Central Bank evaluated the possibility of banning the use and mining of bitcoin in the country.

The Russian Ministry of Finance presented a few days ago a new proposal to establish a regulatory framework for bitcoin in the Asian country, amid the debate that has arisen in recent weeks. According to this organization, it is not necessary to prohibit but to regulate and proposes that the use and exchange of cryptocurrencies be carried out through the country’s banking entities.

The proposal was delivered to the Executive on January 27, a week after the Central Bank of Russia declared that it was analyzing the possibility of outlaw all activity related to the use of bitcoin and cryptocurrencies, under arguments of “financial instability” for the region. A planning that was later refuted by a director of the Ministry of Finance

However, after President Vladimir Putin’s position in support of bitcoin mining became known, which was also considered a threat by the Russian Central Bank, the Ministry of Finance published a document with their ideas on how cryptocurrencies should be regulated.

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For the Ministry of Finance, bitcoin ban could cause economic destabilization. This is because, according to figures from this entity, there are more than 2 trillion rubles (USD 2.5 billion) within the national cryptocurrency market and the volume of transactions of Russian individuals with cryptocurrencies is estimated at USD 5 billion per anus.

Under these arguments, the entity recommends creating a regulatory framework that allows the use of cryptocurrencies, but under the protection and surveillance of the State, without incurring the ban, as was the case in China.

Ivan Chebeskov, the Russian Minister of Finance, considers that Russia cannot ban the use of cryptocurrencies. Source: minfin.gov.ru.

According to the current director of the financial policy department, Ivan Chebeskov, Russia cannot afford to ban cryptocurrency mining, as the country could be put at a technological disadvantage compared to other nations.

Banks would function as exchanges

Because the Central Bank of Russia put on the table prohibit all activity and use of cryptocurrencies, the Ministry of Finance raised the solution not to ban.

His idea is that banks serve as intermediary entities between users of cryptocurrencies, in which there may even be P2P markets. As long as they are governed and regulated by a banking entity. So all cryptocurrency exchanges should operate through banks.

The proposal is based on complying with anti-money laundering policies and know your customer (KYC), currently used by many exchanges. These require that anyone who registers, must go through an identity verification process to be allowed to trade within the platforms.

The objective of all this, according to the Ministry of Finance itself, is to protect the Russian economy from criminal activities in which cryptocurrencies may be involved.

If this proposal were made, it would mean that the use of any cryptocurrency within the country will be fully traceable through banking entities.

For now, the proposal is on the table and will be discussed. The text published by the Russian Central Bank asks to analyze the issue of cryptocurrencies with a deadline that ends on March 1. After collecting opinions, it will determine its position between regulating or prohibiting bitcoin in Russia.

A bitcoin that would not be Bitcoin

If this regulation policy were to occur in Russia, it could be said that the bitcoin used by Russian citizens would not really be bitcoin, but rather one more cryptoactive, centralized and regulated.

Bitcoin is decentralized and has a public and distributed ledger. By existing in the coffers of the banks, users would only trade with promissory notes that, under the concept of trust, would have a value equivalent to a certain amount of bitcoins, but that would not be the original. Although the Ministry of Finance comments that there will be international transfers with cryptocurrencies, there is still much to see.



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