Authorities in Russia are set to recognize crypto as a form of currency

According to a statement on Tuesday, the Russian government and the country’s central bank have agreed to draft legislation or amend existing laws that Russia recognizes cryptocurrencies as a form of currency.

Russia moves to recognize crypto as a form of currency

The deal is a significant reversal after the Central Bank of Russia last month proposed banning miners and some other crypto activities over concerns that they could jeopardize the country’s financial system.

The Kommersant news agency first reported on the announcement on Tuesday. It is understood that cryptocurrencies should be classified as standard currencies such as rubles and not as digital financial assets. The law will be enacted no later than February 18.

Russia’s regulation will seek to integrate a mechanism for the circulation of digital currencies into the country’s financial system while ensuring control of the cash flows of credit institutions, a preliminary translation of a project document said the accompanying manuscript said.

“The establishment of rules for the circulation of cryptocurrencies and control measures will minimize the threat to the stability of the financial system and reduce the use of cryptocurrencies for illegal purposes since a complete ban on the segment of operations related to their circulation is impossible.”

The use of cryptocurrencies as legal money will only be possible after proper identity checks through the country’s banking system or licensed intermediaries, while operations exceeding R600,000 ($8,016) must be declared, according to the document.

Transactions outside of those recommended regulatory parameters would be considered a criminal offense, and fines would be imposed for illegally accepting cryptocurrencies as a means of payment.

“The complete absence of regulation of this industry, as well as the establishment of a ban, will lead to an increase in the share of the shadow economy, an increase in fraud cases and destabilization of the industry as a whole,” the document reads.

There are additional plans to introduce an “obligation” to market participants to educate Russian citizens about the risks associated with digital assets.

Several Russian regulators and legislators, including the Ministry of Finance, the Federal Security Service, the Ministry of Internal Affairs, the Federal Tax Service, and others, were involved in the decision-making process.

“The implementation of the concept will ensure the creation of the necessary regulatory framework, will bring the digital currency industry out of the shadows, and create the possibility of legal business activities,” the statement reads.

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