On January 25, Russia's Ministry of Finance published the text of a draft law that would regulate the issuance, trade, and storage of cryptocurrencies, as well as placing certain legal requirements on parties that hold token offerings, or ICOs.
Originally requested by President Vladimir Putin in October 2017, the bill would allow holders of virtual currencies to trade them for other digital assets, rubles, foreign currencies, and "other property," but only through compliant exchanges.
In order to be considered compliant, the operators of exchanges must act in accordance with "Articles 3 to 5 of Federal Law No. 39-FZ of April 22, 1996 'On the Securities Market,'" while "legal entities that are the organizers of trade" must abide by "the Federal Law of November 21, 2011 No. 325-FZ 'On Organized Trading.'"
According to the bill, token offerings must make several pieces of information available to the public, including "the full name of the issuer of the tokens," "the location of the permanently operating executive body of the issuer," and the address of the issuer's website. The same pieces of information relating to any central authority who would be validating blocks or issuing tokens on the blockchain in question would also need to be disclosed.
Additionally, those conducting token offerings would have to be transparent about the price per token and how that figure is determined; the procedure through which those tokens are to be issued; and the manner in which those tokens can be stored. All required information relating to token offerings would have to be released no fewer than three days before the event is to be held.
An accompanying document on the Ministry of Finance's website explains that the process set forth for holding a token offering is analogous to that of "the initial placement of securities."
If the bill were signed into law, investors who are not compliant with the "On the Securities Market" code would not be permitted to put more than 50,000 rubles (just under $900 at press time) into a single token offering. Furthermore, cryptocurrency holders not in compliance with this law would be allowed to execute transactions involving virtual currency "only by transferring … digital financial assets from a special account to be opened [by the] operator of the exchange… The procedure for opening and maintaining these special accounts is established by the Central Bank of the Russian Federation."
According to the explanatory document on the Ministry of Finance's website, however, the Central Bank of Russia takes exception to the provision that decentralized cryptocurrencies can be exchanged for other digital assets and for foreign and domestic fiat currency. The Bank's stance is that "these transactions should be permitted only with respect to" token offerings.
The Ministry contends that such a wide-reaching ban on the exchange of virtual currencies would lead to the use of digital assets by criminal organizations. The document goes on to argue that the proposed bill "will significantly reduce the risks of fraud, AML/CFT, and will also help create a transparent tax regime for operations with cryptocurrencies, which will lead to an increase [in] … revenues to the Russian budget."
It also relates that the draft law will probably not allow for the use of non-state-issued cryptocurrencies as legal means of payment in Russia.
The same day that the Ministry of Finance made the language of the law public, two other bills were submitted to Russian parliament: one defining the cryptoruble as a valid instrument of payment in Russia and another regulating the mining of the state-issued cryptocurrency proposed in the first bill.
Quotes translated from Russian using Google Translate.