On December 28th, 2017 the Ministry of Finance jointly with the Bank of Russia introduced a first draft of the law on crypto-currency and ICO in the territory of the Russian Federation. The current draft does not yet include the regulations on the crypto-currencies, however this issue will be considered at the next stages. The final draft is expected to be enacted in July 2018.
The draft law establishes norms for regulations of the mining and raising of funds in Russia through the ICO. According to the Deputy Minister of Finance Alexey Moiseev, the ministry “tried to avoid a temptation to over-regulate” the turnover of crypto-currency assets in the same way as on financial markets, and tried to apply more restrained approach.
The main principles of of the first draft:
To classify crypto-currencies and crypto-tokens as “property”. The Ministry of Finance proposes to introduce the concept of a “digital financial asset” and equate it to the category of “other property”. According to the Civil Code, in this category there are, for example, non-cash funds, non-documentary securities or property rights.
To set limits for ICO. The amount of funds raised during ICO is proposed to be limited, in the first stages, by 1 billion rubles (~16.7 million $US), while allowing unqualified investors to invest not more than 50,000 rubles (~833 $US) in tokens. It is also proposed to create a special depository for the storage of smart contracts. It is also proposed to the organizers of an ICO to disclose information about the project and the purpose of collecting funding (on a voluntary basis).
To recognize the mining of crypto-currencies as business activity. The first draft introduces the definition and concepts of a digital transaction and a distributed registry. Mining is defined as a business activity, so, individual entrepreneurs and legal entities can be engaged in mining. It is also planned to levy a mining tax by analogy with the taxation of entrepreneurial/business activity.
Earlier during the discussion Minister of Finance Anton Siluanov called the existing text of the draft law “framework” and in need of improvement. Nevertheless, the participants of the discussion believe that the development of the law should involve experienced market participants who have experience in this area.
“Carrying out operations with crypto-currencies in free access on the territory of Russia will be impossible.” Authorities propose to give such a right only to profile trading platforms (exchanges) that will have a license. “The concept is already there. We will do this through an indication that the purchase and sale of crypto currency must be carried out through organizations that have a license”. Moiseyev said.
Previously, cryptocurrencies were referred to money surrogates, although this concept is not specified in Russian legislation: it was found only in Article 27 of the Federal Law on the Central Bank of the Russian Federation: “The issue of any other monetary units or quasi-money shall be prohibited in the Russian Federation.” and Article 75 of the Constitution “The monetary unit in the Russian Federation shall be the rouble. Money issue shall be carried out exclusively by the Central Bank of the Russian Federation. Introduction and issue of other currencies in Russia shall not be allowed”, but there is no description or definition of crypto currencies or similar terms.
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