President of the Russian Federation Vladimir Putin approved a plan to combat corruption for 2021-2024, which, among other things, also affected cryptocurrencies. The Kremlin intends to form a mechanism for identifying cryptocurrency savings from Russians.
The document states that the Ministry of Finance, the Ministry of Labor and Social Protection, the Ministry of Digital Development, Communications and Mass Media, as well as the Central Bank of Russia must propose a plan to verify data on cryptocurrency ownership by November 15, 2021 .
Also, by September 20, 2023, departments must decide how to fix the provision of «information on the ownership of digital financial assets, other digital rights, digital currency» at the legislative level. Thus, as reported in the document, the authorities want to control the spending of Russians on the acquisition of cryptocurrencies.
The proposal should regulate the procedure for verifying the accuracy and completeness of information about the ownership of digital financial assets, digital rights and digital currency.
- The Kremlin will look into the crypto wallets of Russians.
- The authorities want to control the spending of citizens on cryptocurrencies.
- Final oversight proposals are due by mid-September 2023.
In other words, agencies should analyze the current method of verifying the source of the funds that were used to purchase cryptocurrencies, as well as the transparency of the system for reporting ownership of them.
The General Prosecutor’s Office, in turn, must improve regulation by July 15, 2024 to suppress corruption, which includes digital financial assets, digital rights and cryptocurrencies.
It should be noted that the work on regulating the crypto market at the legislative level has already begun. For example, in early July, the Prosecutor General of the Russian Federation Igor Krasnov said that lawmakers are already working on amendments to the legislation that would allow the confiscation of cryptocurrency obtained by criminal means. According to Krasnov, the amendments will make it possible to apply «restrictive measures and confiscation in relation to virtual assets.» However, the details of the legislative amendments and the confiscation mechanism itself remain unknown.
Meanwhile, the Central Bank of the Russian Federation intends to limit the turnover of not only cryptocurrencies, but also stablecoins. At the end of April it became known that the regulator considers stablecoins as monetary surrogates and intends to regulate them accordingly. However, this decision has already met with resistance from the State Duma deputies. In their opinion, the Central Bank made the decision without consulting the business.
What does this mean for cryptocurrency users?
For cryptocurrency holders, this means that now in Russia there is a trend towards strict state regulation of the turnover of digital assets, explained Moscow Digital School expert Efim Kazantsev.
«The desire of the state to take the cryptosphere under strict control is visible to the naked eye ,» Kazantsev emphasized.
In the law on digital financial assets, cryptocurrency is also listed as property subject to declaration and control in terms of the origin of the costs of its acquisition, added Roman Yankovsky, member of the Commission on Legal Support of the Digital Economy of the Moscow Branch of the Russian Lawyers Association. He stressed that despite the fact that the new decree is directed not at private investors, but at government officials, it can affect all market participants.
“Control over the origin of cryptocurrency can affect all market participants. But the question here is how exactly the state will control it. It seems to me that the content of the decree just says that the state does not know how to do this. They are trying to create some kind of mechanisms, instruments for control, but so far the authorities have no real answer, and in all likelihood it will not appear soon, ”the specialist concluded.
When to expect stricter control over crypto investors?
Crypto investors will begin to monitor more closely, especially when amendments are made to administrative and criminal legislation for non-compliance with the rules of cryptocurrency turnover, the Moscow Digital School expert added. He stressed that this will especially affect holders of digital assets, one way or another related to the public sector.
So far, ordinary users have nothing to fear, Kazantsev assured. The National Anti-Corruption Plan is a high-level document that will not entail immediate action for ordinary users.
“But you shouldn’t relax, the process of regulation of the cryptocurrency sphere in Russia is going along the way of tightening the screws, so I recommend preparing in advance for strict control by the state,” the lawyer advised.
Earlier, Putin signed a decree obliging officials to report on the cryptocurrencies they hold, and ordered to stop the illegal withdrawal of digital financial assets from Russia.
“Criminal elements are increasingly using these digital financial assets, and this certainly needs to be paid close attention to with colleagues from other departments, including Financial Monitoring,” the head of state noted.