Introduction
The Russian Ministry of Finance has proposed allowing licensed exchanges, such as the Moscow Exchange and the Saint Petersburg Exchange, to offer digital currency trading services to select qualified investors. Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, believes that Russia’s largest exchanges are ready for cryptocurrency trading. He emphasized that once the legal framework is established, the exchanges will be able to quickly and seamlessly start trading cryptocurrencies.
Ministry of Finance Proposal
The Ministry of Finance of the Russian Federation suggests that companies from the register of exchanges and trading systems conduct organized trading of digital currency but open it only to a limited circle of “particularly qualified” investors. This proposal is contained in the draft government review prepared by the ministry at the end of June on two parliamentary bills: one on the regulation of cryptocurrency mining (N237585-8) and the other on settlements in digital currency within the framework of an experimental legal regime (N341257-8).
International Settlement Mechanisms
Developing a mechanism for the use of cryptocurrency in international settlements is a directive from Prime Minister Mikhail Mishustin. This directive was given at the end of 2022 to the Ministry of Finance, the Central Bank, Rosfinmonitoring, the Federal Tax Service, and the FSB. Currently, a bill is before the State Duma that gives the Central Bank the right to start creating an experimental platform for the use of cryptocurrencies in international settlements starting September 1, 2024.
Legal Framework and Regulation
In its review of this bill, the Ministry of Finance notes that digital currency settlements for foreign trade participants can be allowed within the framework of general regulation rather than special regulation. To do this, digital currency needs to be recognized as a currency value. Additionally, the ministry proposes, as an experiment, to allow Russian exchanges and trading systems to trade digital currency for a narrow group of investors, recognizing digital currency as a commodity in this context.
Recognizing Digital Currency as a Commodity
The proposal suggests considering within the general regulation the possibility of recognizing digital currency as a currency value and allowing foreign exchange operations with digital currencies, including using digital currency as a means of payment under foreign trade contracts. It also proposes establishing special regulation for organized digital currency trading, recognized as a commodity, based on an exchange or trading system license for a limited circle of “particularly qualified” investors.
Trading Digital Currency on Russian Exchanges
Thus, it is proposed to allow digital currency settlements for all foreign trade participants and to restrict the purchase of digital currency on Russian exchanges to a narrow circle of investors within the framework of the experiment. Currently, the Central Bank’s register of licensed exchanges and trading systems includes seven companies: “Moscow Exchange,” “SPB Exchange,” Saint Petersburg International Commodity and Raw Materials Exchange (SPIMEX), Saint Petersburg Currency Exchange (SPCEX), “Eastern Exchange,” “National Commodity Exchange,” and “CTS Exchange.”
Infrastructure for Cryptocurrency Trading
Previously, Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, stated that the largest Russian exchanges have the infrastructure to immediately start servicing cryptocurrency flows. “Our Moscow Exchange and SPB Exchange, the Saint Petersburg Commodity Exchange (SPIMEX), they are already actively working on this. I mean mastering the market, how to set up the corresponding work (…), if only the legal conditions are created for their work, they will immediately join the process. Therefore, I do not think there will be any problems with this,” said the deputy earlier, responding to a question about how the prime minister’s directive on developing a joint position of ministries on the introduction of international settlements in digital currencies will be implemented in the absence of domestic crypto exchanges in Russia.
Comprehensive Regulation Approach
Since 2022, the Ministry of Finance has consistently advocated for comprehensive regulation of digital currencies and even prepared a bill that would legalize crypto exchanges in Russia. However, consensus with the Central Bank was not reached, so a different path was chosen – conducting an experiment, i.e., using digital currencies for international transactions within experimental legal regimes. The Central Bank agreed with this idea but continued to oppose the legalization of cryptocurrency settlements within the country.
Experimental Legal Regimes (EPR)
In September last year, Ivan Chebeskov, director of the Financial Policy Department of the Ministry of Finance, expressed doubts about the need to test the use of cryptocurrency in export settlements through experimental legal regimes (EPR), as the idea is almost a year old, and “all experiments have been practically passed” during this period. “Honestly, we prefer a comprehensive approach without any experimental regimes because how long can we experiment; the whole country is already engaged in this. I think we already understand the results of this experiment,” said Chebeskov.
Current Legislation and Grey Zone Regulation
According to current legislation, Russian residents cannot settle in cryptocurrency, and the organization of cryptocurrency circulation in Russia is in a “grey zone,” while buying cryptocurrency on foreign exchanges is not prohibited. The date for the consideration of both bills (on the regulation of mining and cryptocurrency circulation for foreign trade) in the State Duma has not yet been determined. They were included in the plan for June but were not considered.
