Russian Business Group Sends Proposal on Crypto Regulation to Prime Minister Medvedev

The Russian Union of Industrialists and Entrepreneurs (RSPP), a business lobby group, has sent proposals for regulating cryptocurrency to Russian Prime Minister Dmitry Medvedev.

Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs (RSPP), in a letter submitted to Medvedev, criticized the three bills already drafted in the field of regulation of digital assets and investment platforms. The State Duma adopted these bills on its first reading in May 2018.

Shokhin also asked Medvedev to postpone the consideration of these bills until 2019 to work on the draft law and incorporate new aspects that would serve the interests of entrepreneurs as well as regulators.

Shokhin claimed that the current legislation sets unreasonably high regulatory standards for digital assets. This would compel Russian startups to move to other pro-crypto jurisdictions abroad.

Shokhin has reportedly sent similar letters to State Duma Chairman Vyacheslav Volodin and presidential aide Andrei Belousov.

On May 22, in its first reading the State Duma had adopted the draft federal laws: ‘On Digital Financial Assets,’ ‘On Amendments to the Civil Code,’ and ‘On Attracting Investments Using Investment Platforms.’

The main bill ‘On Digital Financial Assets’ was laid out by the Russian Ministry of Finance in January. Another version which established Know Your Customer (KYC) regulations for crypto exchanges was drafted in March which the State Duma later approved. The second hearing was postponed till the parliament’s fall session.

Before the second reading, the document was edited. The Duma Committee on Financial Markets reportedly removed terms like ‘mining’ and ‘cryptocurrency’ from the draft bill, and instead focused on tokens and Initial Coin Offerings (ICOs).

RSPP proposes to divide digital assets (tokens) into three types and to establish for each its own legal regime. Thus, for tokens with signs of securities, it is necessary to set strict standards under the supervision of the Central Bank, he believes, and for tokens certifying the rights of demand, the most liberal regime. The third group of the Russian Union of Industrialists and Entrepreneurs has included hybrid tokens, the qualification of which will be taken by the Central Bank.

According to a report by Russian financial newspaper Kommersant, three federal ministers would discuss RSPP’s proposals on crypto regulation by the end of this month.

Yury Pripachkin, President of the Russian Association of Cryptoindustry and Blockchain, also expressed his concern over the adoption of appropriate regulation for the crypto industry. He emphasized that the drafting of laws should be based on thorough research on the subject. Again, taking note of the comments, requirements, and experiences of the business community regarding the matter was also equally essential. If these conditions are not considered while developing the crypto-related legislation, it might lead to an ‘outflow of investments from the country,’ he believes.

He added, “The bills do not have a holistic picture, they do not even mention the objects of regulation that determine the development of the new industry worldwide: smart contracts, contract money, mining, cryptocurrency, digital profiles, etc. Instead, we are talking about some uncertain digital assets.”