Russian Finance Ministry Says Crypto Shouldn’t Be Legal Currency

Russia’s finance ministry opposes giving bitcoin legal tender status as the country moves forward with crypto regulatory plans

article-image

Source: Shutterstock

share

key takeaways

  • The Russian Ministry of Finance has revealed details of proposed cryptocurrency law
  • The announcement comes as tensions between Russia and Ukraine mount

Cryptocurrencies should be not be given legal currency status and treated only as an investment vehicle, the Russian finance ministry said Monday.

The recommendation forms part of a draft cryptocurrency law the ministry presented to the Russian Parliament Feb. 18. The finance ministry’s proposal reinforces Russia’s current policy of not allowing cryptocurrencies to be used as a form of payment.

The bill focuses on defining regulatory requirements around exchanges. It also proposes that citizens looking to purchase and hold digital assets complete a screening process that would assess knowledge of the technology and associated investment risks.

The announcement mentions the ongoing controversy around cryptocurrencies in the country. The Bank of Russia — the country’s central bank — had proposed that all cryptocurrency mining, issuance and circulation should be banned in the country, the Ministry of Finance said.

“The proposals received from the Bank of Russia will be taken into account in further work on the draft law in so far as it does not contradict the approaches of the Russian Ministry of Finance,” the Ministry said in the release, which has been translated into English. 

The move comes as growing concerns over conflict between Russia and Ukraine have put pressure on risk assets. Bitcoin and ether are down about 11% and 5% over the past week as fears over a war in Eastern Europe mount.

Analysts are confident though that the market can withstand the geopolitical forces at play as long as things do not escalate. It is a similar situation to the 2014 Russian invasion of the Crimean Peninsula, once part of the Ukraine, Tom Essaye, founder of Sevens Report Research, wrote in a recent note.

“Analysts believe that Russia may be setting up a precedent to invade Donbas [in eastern Ukraine] and annex part of the territory,” Essaye said. “Would that be a materially bearish event? No, not unless it created an all-out war between Ukraine and Russia (which is still unlikely).”

The announcement from the Ministry of Finance did not mention how the current situation in Russia — which is facing an increasingly harsh battery of economic sanctions from Western nations attempting to dissuade Putin from invading Russia — may impact the future of the crypto bill.

Some have suggested Russia will accelerate its development of a digital currency to help it mitigate the sanctions’ impact.

A full text of the bill has not yet been made public.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

The Department of Justice and Commodity Futures Trading Commission announced back-to-back lawsuits against KuCoin Tuesday

article-image

Judge Failla found that Coinbase didn’t operate as an unregistered broker in offering its wallet service

article-image

A fund by Laser Digital offers investors exposure to the Polygon network, while a new 21Shares ETP focuses on staking rewards from Toncoin

article-image

Sponsored

The TRON network’s integration into Dune brings a wealth of data and insights to the fingertips of users

article-image

A BTC futures fund offered by Hashdex and Tidal Investments has gotten regulatory clearance to hold bitcoin directly

article-image

At launch, Chain Signatures will be compatible with Bitcoin, Ethereum and Cosmos network chains, as well as DogeCoin and XRP Ledger