- Authorities in the country have agreed to recognise crypto assets as currency though their use and trading will be regulated
- The decision comes less than a month after Russian authorities proposed outlawing cryptocurrencies in the country
In what can best be described as a U-turn move, Russian authorities have formally agreed to treat cryptocurrencies as currency. News reports emerging from the local outlets in the country detail that the government will collaborate with the Bank of Russia to draw up draft legislation defining these assets' use.
Several parties were reportedly involved in the discussion that birthed the decision. Some of them are the Ministry of Finance, the Federal Tax Service, the Federal Security Service, and the Ministry of Internal Affairs.
Russia's central bank rows back on its proposal
The move to adopt while carefully regulating these assets comes as a surprise, considering that the country's central bank was hell-bent on banning crypto altogether not long ago. Though Russian President Vladimir Putin intervened and advocated for a less stringent course of action, not many anticipated that the country would have such a change of tune.
The legislation is expected to be drawn and finalised before February 18th, with its implementation set to protect the country's financial system from threats posed by digital assets. Through the move, Russia intends to bring cryptocurrencies to the fore in a way that doesn't spell harm to its financial stability.
Cryptocurrencies will no longer be viewed as financial digital assets rather as an "analogue of currencies," according to the reports. A section of a published draft document stipulates that the regulations will facilitate the incorporation of cryptocurrencies into the existing financial system without adversely affecting the traditional financial system.
Rules in place to manage crypto use
Russian residents will be allowed to use, hold and even trade crypto assets in strict observance of specified rules. For instance, they will have to conform to identity checks through the banking system or approved intermediaries. Crypto activities involving sums exceeding R 600,000 have to be reported.
Acting outside these rules (illegal acceptance of crypto as payment form) is strongly admonished and will attract fines. Cryptocurrency service providers will equally be required to meet the specified requirements meant to offer investor protection.
There are also plans to enforce guidelines that will mandate parties involved in the crypto sector to provide adequate information to users on risks that come with cryptocurrencies.
Analysts have predicted that this decision will have a net positive sway in the crypto market. However, as of writing, the bullish impact is yet to be felt among top cryptocurrencies. Bitcoin is still trading just above $44,100 while Ethereum is hovering around $3,195.