The Bank of Russia is the monetary authority in Moscow and it wants people using digital assets illegally to be held accountable for their actions. Therefore, a proposal was put forward by the financial regulator for introducing legal liability for some activities with these cryptocurrencies that it regards as illegal. The Russian Federation has only partially regulated cryptocurrencies, along with operations related to it. They have introduced the law named ‘On Digital Financial Assets, which was put into effect at the start of the year. There is one aspect that hasn’t been clarified as that is whether it is permitted to use digital assets to pay for goods and services.
The Central Bank of Russia (CBR) has been against allowing Bitcoin and other crypto payments consistently. According to the authority, these are ‘money surrogates’ that the current Russian legislation does not allow. This is because only the ruble is recognized as the legal tender in the country, which is spread across 11 time zones. Now, the CBR is interested in introducing legal liability for what it refers to as the illegal circulation of these digital assets. What is remarkable about it is that this push is part of the CBR’s plans of creating an environment for introducing new technologies and supporting innovation in the financial markets.
The program document of the Bank of Russia now includes this proposal and it has been given the title of ‘Main Directions for Financial Market Development of the Russian Federation till 2024. Its Board of Directors recently gave their approval for the project for submission with the Federal Assembly’s lower house that’s known as the State Duma. The CBR says that for the development of innovative financial instruments, they would have to adopt a number of federal laws that are designed for legally regulation these digital financial assets comprehensively, along with utilitarian digital rights.
As per the central bank, there is another aspect that has to be addressed, which involves the taxation of transactions pertaining to these assets and rights and they need to establish a procedure for it. It was further noted by the Bank of Russia they are still making efforts of launching a digital version of their national currency. This would be the third form of the ruble, after bank money and cash, and a series of legislative changes would be needed for it. Anatoly Aksakov, the Financial Market Committee’s head said in November that deputies are Duma are looking to amend around 13 codes and laws for accommodating the CBDC.
Meanwhile, there have been concerns about the digital ruble being risky when it comes to information security and the banking sector. Elvira Nabiullina, the Chair of the Bank of Russia, recently said that Russians need the new currency because it would provide them an alternative to stablecoins and cryptocurrencies and enable them to make reliable and cheap payments. The CBR had begun looking into a CBDC back in 2018 and had considered the possibility of issuing one last year. They had published a consultation paper in October 2020.