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The big picture behind Russia’s draft law for crypto-regulations

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It’s natural to be excited when a country announces it is working on a crypto-regulation law or even a draft law. However, crypto-lovers and investors need to pause and take a closer look before concluding that the development is a bullish sign for the industry.

With that, here’s what is going on in Russia.

Time to hit the books

A Russian government website reported that on 18 February, the Ministry of Finance submitted a draft law for the regulation of cryptocurrency to the Government of the Russian Federation.

However, the official release was quick to remind Russians that using crypto as a means of payment is still illegal. Rather, the draft law means to regulate crypto as an investment.

But, that’s not all. Some proposed regulations include bringing exchanges under the control of a centralized body, identifying all clients, and only allowing crypto withdrawals/deposits through a bank account. KYC will be vital for both exchanges and clients, while banks will also take part in crypto-compliance.

Furthermore, traders can’t just waltz into the industry. The draft law proposed a crypto knowledge and risk test for all potential investors. The results will reportedly decide how much money they will be allowed to invest.

A translation of the release stated,

“Upon successful completion of testing, citizens can invest in digital currencies up to 600 thousand rubles annually. If the test is not passed, then the maximum amount of investments will be limited to 50 thousand rubles. Qualified investors and legal entities will make transactions without restrictions.”

600,000 roubles meant around $7,656 while 50,000 roubles was worth around $638, at press time.

“Putin” a good word for crypto

It was widely reported that Russia’s President Vladimir Putin is bullish on crypto and felt that Russia is well-suited to the industry. While requesting a government-bank agreement on crypto, he was quoted as saying,

“Of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.”

However, the timing is crucial. This announcement came shortly after Ukraine passed legislation to make crypto legal in the country. Naturally, analysts are questioning whether the two countries’ updates are linked, and whether they will cut across each other in the near future.

Feeling down in the dumps

The market has been feeling the tension of strained Russia-Ukraine relations as well. Both the price of Bitcoin and the S&P500 fell together, raising fears about their increasing correlation. Meanwhile, gold hit an eight-month high. This is a sign that there is a lot of FUD in the global atmosphere.

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Sahana is a full-time journalist at AMBCrypto. She has a Masters in Journalism and her areas of study include crypto-regulation, digital society, privacy, and intersectionality. Ask her about film photography and philately.

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