Russia’s Association Financial Innovation (AFI) released a “roadmap” for improving the regulation of the National Payment System that includes using blockchain technology, according to Plusworld, a Russian news source.
Following discussion, the proposal is to be submitted to the Bank of Russia, the Ministry of Finance, the Federal Financial Monitoring Service and the State Duma.
First Provision Includes Blockchain
The development of a unique identifier, possibly using blockchain technology, is noted as the first of nine provisions, along with expanding short-term opportunities of transactions under a simplified customer identification.
The proposal emphasizes strengthening measures to prevent illegal transactions and facilitating non-cash instruments
The proposal reflects the country’s gradual embrace of blockchain technology despite initially scorning bitcoin and cryptocurrencies. The Internet Development Institute (IRI) of Russia in December of 2015 prepared a roadmap titled “Economics and Finance” which included a proposal for legalizing blockchain technology by 2017. That roadmap is a supplement under the wider proposal called “Internet Program 2025,” an initiative that puts together proposals for the development of Internet and communication as a whole in Russia.
Additional provisions of the new proposal are:
2) Expansion of the list of transactions for bank payment agents and payment aggregators to reduce risks and remove regulatory arbitrage.
3) Development of a concept model of the functioning of financial experiments as they relate to necessary legislative changes, including new laws with participation from relevant market participants, risk managers and self-regulatory organizations.
4) Extending the list of professional standards to maintain the role of payment industry experts.
5) Forming the infrastructure and protecting the rights of payment service users, in addition to information on persons carrying out illegal cash transactions. The provision includes creating a central database of persons involved in illegal transactions.
6) Developing measures to increase payment service opportunities without the involvement of credit institution stakeholders, such as operators of mobile radio communications or persons holding a significant position in the Spaces public network that provides data transmission services.
7) Creation of proposals on payment services in price control, including the development of sectors used by the payment industry.
8) Improving the availability of non-cash payment instruments.
9) Developing standardization activities for payment service providers.
Government Adjusts Positions
A document by the federal tax authority in Russia in December revealed its first official stance on the legal status of cryptocurrencies. Bitcoin cannot be blocked or banned as it can be deemed foreign currency transactions according to Russian laws.
The Bank of Russia has developed a technical prototype called “Masterchain”. The prototype is based on distributed ledger or blockchain technology for the Russian financial market.
The blockchain platform prototype was developed for financial messaging between banks in the Russian financial system and was tested. The “Masterchain” a networking tool for participating members using blockchain technology, including Sberbank, Alfa Bank and Tinkoff Bank and Russian payments operator, Qiwi Group. The platform enables for “prompt confirmation of data actuality” to a transacting customer. The innovation also makes instant communication possible between counterparties among the platform, while assuring confidence in financial transactions.
Russian banks and financial services firms in July formed the country’s first financial blockchain consortium in an effort to explore and implement blockchain solutions in the banking and financial services industries, CCN.com reported. The group consists of the Qiwi Group; a handful of banks, namely, B&N Bank (BINBANK), MDM Bank (Moscow Business World Bank), Otkritie Bank , Tinkoff Bank; and services & consultancy giant Accenture.
In November, the head of the country’s largest bank, Herman Gref, CEO and chairman of Sberbank, espoused the benefits of cryptocurrencies. Sberbank and the Federal Antimonopoly Service of the Russian Federation in October announced a blockchain pilot for the encrypted exchange of documents.
The Deputy Finance Minister of the Russian Federation stated in October that the spread of bitcoin in Russia does not represent a threat the country’s financial ecosystem at its current rate of adoption. As such, an earlier announced plan to ban the cryptocurrency was put on hold.
The Ministry of Finance proposed a 4-year prison sentence for bitcoin users late last year in an effort to enforce a new amendment to the criminal code. In what could be seen as a move to bring brief respite, the Ministry then proposed a 2-year “corrective labor” sentence – a combination of penal detention and forced labor – for bitcoin adopters, earlier this year.
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Last modified: March 4, 2021 4:54 PM