Russian Central Bank Wants to Clamp Down on Cryptocurrencies

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    Russia Cryptocurrency Ban

    Director of the Russian Central Bank Alexey Guznov has signalled they are against institutions for organizing the production of cryptocurrency in Russia according to a recent Q&A in Interfax online, Russia's first non-governmental channel news channel formed in 1989 and now the largest diversified information group in the CIS.

    However, if individual owners of cryptocurrency complete their transactions in a jurisdiction that does not prohibit this, they are unlikely to be able to pursue cases.

    The Russian legislation on digital financial assets (CFA) was adopted on first reading in 2018 but has undergone significant changes since.

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    Guznov spoke to Interfax about what kind of consensus the Russian authorities came to regarding cryptocurrency circulation on the territory of the Russian Federation, what new terms and requirements appeared in the bill on CFA, as well as other important bills for the Central Bank.

    “The problem of cryptocurrency and generally crypto assets (and this is not only our problem) is that it is not very clear how to ensure the enforcement of judicial decisions regarding them against them. For example, a spouse buys crypto assets for the entire amount of income and stores them in a crypto wallet. A dispute arises regarding this property, within the framework of, say, divorce proceedings, and the court says: “Yes, all proceeds must be divided.” The court is even ready to issue a writ of execution.”

    “And then I would like to look at the bailiff, who, on the basis of this writ of execution, will try to do something. Where to go, to whom, with what to go? Obligate a person who has keys to access a crypto wallet to provide an access key? Theoretically, it is possible, but you can say: “Oh, forgot. Oh, lost.” Unfortunately, a lot of crypto assets are already in wallets that have lost access keys, and this in itself creates problems.”

    “We could not ignore this, and therefore the project involves obliging the operator of the information system where the release of digital financial assets will be carried out, if necessary, provide access to them. Technologically, as colleagues say, this is possible, although maybe this is somewhat inconsistent with the ideology of the notorious Bitcoin, which is based on anonymity and on the fact that no one except the owner can access the corresponding conditional property in the form of bitcoins, which are in which something to the wallet.”

    “The bill resolved the issue, including the issue of secured digital financial assets. So, the decision on the issue may indicate that digital financial assets are issued as secured by the property of their issuer or third parties, a description of the subject of collateral, as well as the conditions of collateral.”

    He added that there are great risks in legalizing the circulation of cryptocurrency, both in terms of financial stability and the system of combating money laundering, and in terms of protecting consumer rights and the central bank objected to the fact that this, so to speak, “tool” was legalized as an object of the appeal.

    It may consist in the fact that no one will forbid to own digital currency. This is absurd to some extent, well, and in general this is not the reason, it is still not drugs or weapons. But from the point of view of the functioning of the financial system and the consumer protection system, the legalization of the issue, and most importantly, the organization of cryptocurrency circulation, is an unjustified risk. Therefore, the bill directly formulates a ban on the issue, as well as on the organization of the circulation of cryptocurrency, and introduces liability for violation of this ban.”

    Guznov also stated that the initiative is to more easily be able to revoke licenses for scam companies to shut them down or help bring them to bankruptcy as well as determining which parts of government a liable to do take actions against cryptocurrency companies. 

    The new legislation will allow law enforcement agencies to act more efficiently in any case.


    Also published on Medium.