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Russia Postpones Parliamentary Reading of Crypto Regulation Bill

Last Updated March 4, 2021 3:51 PM
David Hundeyin
Last Updated March 4, 2021 3:51 PM

The Russian Duma has pushed back its planned consideration of a bill to recognize and regulate digital financial assets. Initially scheduled for March 22, the reading will now hold at an unspecified date in April , following the outcome of a vote on the agenda for a plenary session last week.

The draft bill is not without its controversies, as it has been specifically edited to remove the terms “cryptocurrency,” “smart contract,” and “token.”

Russia, crypto
Russian President Vladimir Putin doesn’t see crypto as a store of value. | Source: Shutterstock

This is in line with Russia’s surprisingly cautious position on cryptocurrencies,which has seen authorities repeatedly drag their feet on the possibility of creating a regulatory framework for crypto-trading. CCN.com reported in 2018 that when asked about his government’s position on digital money, Russian President Vladmir Putin said:

In most countries, cryptocurrency is not a means of settlement. The Central Bank of the Russian Federation believes that cryptocurrencies cannot be a means of payment, settlement or store of value. These currencies are not secured by anything.

Russia’s Extended Dovishness on Crypto Regulation

Despite reportedly considering cryptocurrencies as a means of getting around U.S. sanctions alongside countries like Iran and North Korea, Russia as made surprisingly little progress on the crypto regulation front. The country’s central bank has refused to put its weight behind the idea of recognizing cryptocurrencies, despite appearing to hold a contradictory position on ICO fundraising, which bank head Elvira Nabiullina once described as “efficient.”

Russia’s contradictory position has often been interpreted to mean one of two things. The first school of thought has it that the country hosts a deeply conservative power bloc at the heart of its government, which views cryptocurrency with deep suspicion bordering on hostility. As a result of this, it may be politically difficult or impossible to make much headway with any kind of crypto regulation agenda.

The second idea suggests this may all be an elaborate con by the famously technology-obsessed Russians, who are working underground to create their own cryptocurrency they’ll use to upend the global financial order working against them. The Russian government is only pretending to be dovish on crypto to hide its true intention of creating a crypto-based financial framework outside SWIFT control, effectively bypassing U.S. economic sanctions.

Russia, crypto
The pushback comes when officials appeared largely in favor of the bill just days before the decision. | Source: Shutterstock

Russia Plays Hide and Seek with Crypto Bill

Russian news platforms say the reading’s postponement was proposed by the head of the Duma’s Financial Market Committee Anatoly Aksakov . No explanation was given for the postponement. It will be recalled that on March 18, the committee had recommended the bill for adoption in the second reading after editing the document to remove all mentions of terms referencing digital currency or cryptocurrency.

The initial draft bill proposed to create a framework for regulating digital financial assets, which were expressly identified as “cryptocurrencies” and “tokens.” It also provided a legal basis for recognizing the validity of smart contracts. Even more interestingly, it recognized the subtle difference between cryptocurrencies and tokens, and put forward a plan to recognize both digital assets as property under Russian law.

Now, instead of serving as a framework to legalize and regulate crypto assets, the bill is a much broader and non-specific document recognizing the existence of digital financial assets including digital intellectual property rights. Under the bill, such rights can now be included and transferred within the context of equity securities.