Russia to Officially Recognize Crypto As a Form of Currency, Integrate It With Financial System

In a major twist of events, Russia has finally decided to legalise the use of digital assets as a form of currency. Russian newspaper Kommersant was the first to report this news earlier today on Wednesday, February 9.

In a tweet later, it further noted that the government and the Bank of Russia shall be releasing a draft law next week by February 18. The draft law will have details regarding the circulation of digital assets in the Russian Federation.

This is a major reversal from a previous report earlier this year that the Bank of Russia is mulling for a complete ban of digital assets. One of the draft documents from the Russian government on Tuesday, February 8, notes that the distribution of digital assets will happen through the country’s banking systems or licensed intermediaries.

This will help the authorities to keep a check on the flow of crypto assets in and out of the country. The Russian government mentioned that this kind of arrangement will help in protecting the rights of ordinary investors.

Transacting anything outside the legal parameters will be treated as a criminal offense. The Russian administration will impose heavy fines in case of such violations.

The draft also mentions the regulatory policy will have two categories of investors - qualified and unqualified. Besides, it will also ensure licensing requirements for crypto trading platforms. Thus, it will be mandatory for these platforms to “have financial airbags in terms of liquidity and capital adequacy”.

The draft also notes: “The purpose of the regulation is to integrate the mechanism for the circulation of digital currencies into the financial system and ensure control over cash flows in the circuit of credit institutions”.

Furthermore, the crypto trading platforms will also have to inform market participants about the risks associated in dealing with crypto assets. “The complete absence of regulation of this industry, as well as the establishment of a ban, will lead to an increase in the share of the shadow economy, an increase in fraud cases and destabilization of the industry as a whole,” the document reads.

The Russian authorities noted that the implementation of this concept will lead towards the creation of a necessary regulatory framework thereby leading to legal business activities in the crypto space.