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Russia Isn’t Bothered to Recognize Bitcoin for Now, Says Justice Minister; What Drove his Decision?

Last Updated March 4, 2021 2:53 PM
Mark Emem
Last Updated March 4, 2021 2:53 PM

Russia’s Minister of Justice, Alexander Konovalov, has indicated that it is unnecessary to give cryptocurrencies a legal definition at this point in time, according to the country’s state-owned news agency TASS .

In a meeting with Russian legislators, Konavalov argued that it would be unwise to define cryptocurrencies in their current state. Additionally, Konavalov said it was also premature to formalize legislation touching on cryptocurrencies in Russia.

As was reported by CCN.com mid last month, there are legislative efforts relating to cryptocurrencies and ICOs being undertaken by the Russian parliament.

Why Russia Wants to Go-Slow on Crypto Regulation

The Justice Minister’s urging of caution could have been prompted by the realization that cryptocurrencies are a nascent technology. Thus attempts at enforcing strict regulations could stifle innovation.

From the domestic point of view, Konavalov could simply have been acknowledging that the complexity and uncertainty that surrounds cryptocurrencies in Russia would only be intensified by rushing additional legislation. For instance, the use of cryptocurrencies as a means of payment is prohibited in the country. But the kind of asset that cryptocurrencies are is yet to be agreed upon.

In making the plea, Konavalov could also have been taking the cue from more senior members of the Russian cabinet. Late last year Russia’s deputy prime minister, Maxim Akimov, urged caution in regulating cryptocurrencies.

Senior Government Officials in Russia Speaking in One Voice on Crypto Matters

Konavalov could also simply have been following the Prime Minister’s example. Last month, Russia’s Prime Minister, Dmitry Medvedev, warned against disenfranchising the cryptocurrency sector. According to Medvedev, cryptocurrencies had their benefits and should therefore not be ‘buried’.

But this, of course, is not a reason to bury them [cryptocurrencies]. Here […] there are both light sides and dark sides, as in any social phenomenon, in any economic institute. And we should just watch closely what happens to them.

In urging caution Konavalov was also fully aware of the fate that met the Digital Financial Assets bill that the State Duma adopted last year. The bill triggered controversy and even though it was introduced early last year it is yet to be finalized.

Private Sector in Russia Not Happy with Crypto Legislation Efforts Too

Some of the bill’s fiercest opponents include the Russian Union of Industrialists and Entrepreneurs and palladium and nickel mining firm Norlisk Nickel. The mining firm’s opposition stems from the fact that the bill failed to differentiate between digital assets and traditional assets. The mining firm is understood to be planning on issue tokens which are backed by precious metals and other commodities.

At the time, Russia’s deputy prime minister said that despite the hiccups experienced discussions were ongoing:

We are having a big conversation with any interested parties, we are in a dialogue and discuss it at various venues. We adhere to the position that has been worked out at the site of the two committees [the Finance Committee and the Civil Law Committee of the State Duma].