Elvira Nabiullina, Governor of the Central Bank of the Russian Federation, compares digital currencies to a financial bubble while Alexei Moiseev, Deputy Finance Minister, believes only professional investors should be allowed to trade cryptocurrencies. In the market one may find absolutely apposing opinion too, as the opponents of the cryptocurrency trade regulation point at the market’s extremely low capitalization and hence its insignificance for the national economy.
It appears there is no common understanding of the essence of the future market regulation and, most importantly, of the prospects of its introduction, even in the expert community directly involved with the draft law development. Elyna Sidorenko, the head of the work group on cryptocurrency circulation risks assessment at the Russian Federation State Duma, doubts the cryptocurrencies legislation may be passed this autumn, whereas Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, believes the respective law may be enacted this fall.
The prospects of the cryptocurrencies market legislative regulation in Russia and its possible impacts on the national economy were discussed at Cryptoruble and Modern Technologies: New Opportunities Blockchain business forum arranged by Commersant publishing house on September 22.
Absolute lawlessness
A draft law regulating cryptocurrencies was expected to be produced by the interagency group on cryptocurrencies circulation risks assessment headed by Elyna Sidorenko, Professor of Department of Criminal Law, Criminal Procedure and Criminology at MGIMO University in Moscow. According to Sidorenko, there were several versions of the draft law which were discussed at the State Duma and at the Federal Financial Monitoring Service, but a final document has not been produced yet.
“It became evident we had not anticipated all possible risks and had not analyzed all aspects of the problem. Therefore, having the law passed in September or October, would be a daring move which would hardly bring positive results”, Sidorenko says.
Nevertheless, the State Duma continues drafting the law and it appears the work is now undertaken by the work group of the Committee on Financial Markets. Anatoly Aksakov, Chairman of the Committee, mentioned the fact in early September and stressed the group started its meetings in narrow format and will carry on in expanded format as well.
As Aksakov put it, “At the meetings, the specifics to be covered by the law were identified and within days the group will launch its work in expanded format”.
According to Sidorenko, further two to three months will be required to coordinate all viewpoints and reach consensus on which the law will be based then.
“By an inadequate regulation we may push the new economy far aside and as a country we will not be able to rescue it afterwards without a reputation loss, whereas our aim is being among the leading nations in that area, not at the very end of the list. If draft law is passed this autumn, that may produce a ruinous effect on the overall system development”, she says.
Anatoly Aksakov’s viewpoint is quite the opposite and he insists that “all respective legislative decisions are to be made as soon as possible”.
Bitcoin as a digital asset
How should the market of digital currencies be regulated in Russia? This is a fundamental question since if, for instance, cryptocurrencies are awarded the status of digital goods, that will subject them to payment of VAT – which is perceived most negatively in the cryptocommunity.
In view of Elyna Sidorenko, a law on cryptocurrencies could introduce a notion of a “digital asset” in the legislation.
“That would sort out many issues”, she says. – “The concept of an asset is quite broad in the Russian laws thus giving us some room for maneuvering. The notion of assets includes money, securities, goods, financial derivatives, and we therefore could add cryptocurrencies here as digital assets”.
She thinks Russia could follow the path of Japan and introduce respective regulation gradually. The digital currencies status may be acknowledged in Article 128 of the Civil Code, to start with.
“Once we accept digital currencies as subjects of our civil law, we will unveil all uncertainties surrounding the cryptocurrencies today. Respective activities should be allowed and exposed first”, Sidorenko explained.
Still, are the authorities ready for the adjustments in the financial market which will be inevitably brought about by the blockchain technology? Anatoly Aksakov holds the opinion there certainly is no such readiness, at least at the moment.
“All government agencies such as the Ministry of Telecom and Mass Communications, Central Bank, Bank for Development and Foreign Economic Affairs are nevertheless actively analyzing this phenomenon. I know Rosneft oil company is getting actively involved as well. We see accumulation of expertise on the subject, and I am sure quantity will eventually turn into quality here», Aksakov pointed out.
ICO playpit
Meanwhile, the prospects of regulation of ICO in Russia attract a much greater attention of experts and market players. Anatoly Aksakov believes the procedure may be legalized in Russia, at least in a pilot mode. That could become a source of attracting investments to the country, including investments from China where ICO was banned, he says.
“There should be set rules for the offering. I think our national regulator could launch a pilot project at Russian Trading System stock exchange or at Moscow stock exchange”, Aksakov specified.
In his view, the instrument must be permanently tested for better understanding of regulation adjustments required.
Similar opinions were voiced at a regular CryptoBazar which took place in the Russian capital on September 21. The participants of the event actively discussed the prospects of setting a regulatory playpit to arrange ICOs in Russia.
“National regulator should consider a possibility of allowing some special conditions in Russia, at Skolkovo Innovation Center, for instance, in order to start experimenting consciously and purposefully”, believes Marina Gurieva, Cyber Fund CEO and cofounder.
She cites Belarus as an example. There, any blockchain-related activities are concentrated in Hi-Tech Park. Gurieva mentions having taken part in drafting an executive order regulating that sort of activity.
“They want to give it green light to see what happens then”, she says.
In fact, Voskhod online platform could become such a site. LavkaLavka ICO launch is in its plans now, while Russian Trading System and Skolkovo Innovation Center have set up a non-profit partnership which will use the platform for arranging ICOs for start-ups.
By Olga Blinova