Despite the fact that Russia passed its first crypto law in January 2021, the country’s cryptocurrency economy remains mostly unregulated and fraught with uncertainties.
According to Yury Pripachkin, the president of the Russian Association of Cryptoeconomics, Artificial Intelligence, and Blockchain (RACIB), present Russian crypto rules are “half-measures” which have nothing to do with systemic approaches.
The RACIB CEO is not alone in believing that the Russian crypto business is mainly unregulated. According to Anna Maximenko, a counsel at the international law firm Debevoise & Plimpton, Russia’s present crypto legislation is “limited to the concept of cryptocurrency” and a few other issues such as the prohibition on crypto transactions.
“Other parts of cryptocurrency turnover, including as exchanges and investor requirements, are now unregulated,” Maximenko says. As per the expert, the lack of regulation results in a situation in which no cryptocurrency markets are licensed in Russia, but people can still use the facilities of overseas crypto exchanges such as Binance.
Pripachkin mentioned Russian President Vladimir Putin giving repeated successive commands to embrace crypto law over the last four years in an interview with local news outlet RBC. The CEO emphasized that the total market value of crypto has increased from roughly $200 billion U.S. dollars to the present $2.7 trillion, yet local politicians have done little to collect this value:
“Russia has done nothing to control the domestic cryptocurrency sector, which accounts for 10% of the global crypto market,” Pripachkin added. He went on to say that the size of the Russian cryptocurrency world is similar to the $270 billion in annual federal spending income.
Pripachkin argued that Russia’s crypto law “On Digital Financial Assets” provides a wide legal basis for cryptocurrency but does not define significant industry concepts such as smart contracts or govern activities such as crypto mining, distribution, and regulation. Maximenko said,
Taking into consideration the Bank of Russia’s negative stance on cryptocurrencies, it may well be the case that there will be no Russian crypto exchanges, while foreign crypto exchanges will stay in a grey zone.
The announcement comes as the Russian government expresses growing interest in bitcoin and other Cryptocurrencies (BTC), with certain ministries offering to mine the coins with related gas.
However, when it concerns the interests of its own citizens, the Russian government remained suspicious about Bitcoin, with the Bank of Russia attempting to limit transfers to cryptocurrency exchange as crypto investment grows increasingly prominent among domestic investors.