Regulation of Cryptocurrencies Outlined by Russian Authorities ���������������������������������������������������������

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The document seen by Reuters on Friday shows Russian authorities have drawn up a 'road map' that envisions restrictions on cryptocurrencies but not a complete ban on trading and mining, as advocated by the central bank. Politicians have urged the central bank to rethink its policy of restricting cryptocurrency trading and energyintensive mining on Russian soil due to financial instability concerns.

President Vladimir Putin has requested that a consensus be reached. Members of the finance, economy, digital, interior ministries, the FSB security service, and the central bank were involved in its development. The road map was reportedly signed by Deputy Prime Minister Dmitry Chernyshenko, as first reported by business daily RBC. Chernyshenko's representative confirmed the document's authenticity.

According to the document, all agencies, except the Bank of Russia, supported the road map points. The central bank acknowledged that it was familiar with the draft. It is deemed necessary to draft a law banning the issue and circulation of private digital currencies on Russian soil, Danilova said later on Friday, adding that "We do not intend to ban ownership of cryptocurrencies," Elizaveta Danilova, head of the central bank's financial stability department, said later on Friday.

According to Fitch Ratings, the proposed ban will limit the exposure of the Russian financial system to risk but may slow down innovation and slow down the technological development of Russian banks in the long run.

The working group's proposal would allow only Russian banking institutions to purchase and sell cryptocurrencies. The document suggests creating procedures to block foreign crypto exchanges from offering services to Russian users, suggesting that foreign platforms can obtain licenses to operate in Russia.

Reuters reported this week that Binance, the largest cryptocurrency exchange globally, plans to expand into Russia.

Cryptocurrency mining, in which powerful computers solve complex mathematical puzzles as part of a global network, continues to be opposed by the central bank. It warns about inefficient energy consumption and environmental impact. The report cited the many cryptocurrency projects with Russian roots as proof that banning cryptocurrencies slowed the development of the IT industry significantly.

The report called for the road map to be approved soon. Central bank official Danilova said no decision had been made. Legal action cannot be taken by either the central bank or the government... All parties have been contacted."

As an example of the problems mining could cause, Kazakhs, the world's second-largest Bitcoin mining hub, were cited. This week, Putin pointed to Russia's competitive advantages of surplus electricity and well-trained personnel as reasons for being able to handle the situation.

In August, Russia accounted for 11.2% of global "hashrate" (crypto jargon for the amount of computing power used by Bitcoin computers).

Russia plans to test a digital rouble to facilitate payments for individuals and businesses in response to Western sanctions. Fitch said that the digital rouble might cause some deposits to leave the banking system, increasing competition for funding and raising interest rates modestly. 

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Crypto Weekly

Washington's Latest Threats Thwarted by Crypto Community

The Treasury secretary can ban crypto transactions under a new bill gaining traction

Washington poses a new threat to cryptocurrency advocates

Crypto advocates are concerned about two separate policy changes brewing in Washington. These changes could give federal regulators the power to ban financial institutions from engaging in cryptocurrency transactions and hamper crypto developers with new, "radical" regulations.

First, the Securities and Exchange Commission released a new rule proposal on Wednesday aimed at improving oversight of off-exchange securities trade platforms, which are typically used in the bond market and some derivatives markets.

Gabriel Shapiro wrote in his Thursday newsletter that this new proposal could easily be used to expand the definition of stock exchanges to include automated market makers, which are types of protocols that match buyers and sellers of cryptocurrencies without an intermediary.

Shapiro wrote, "We should not underestimate the significance of the SEC's radical and sudden paradigm shift for blockchain and decentralized finance." "Consumers have had just 30 days to voice their opinions - the SEC must revise this proposal to clarify that it does not intend to prohibit simple code for peer-to-peer token trading websites."

Though the SEC provided a concise 30day period for comments, that period is likely to be longer since a backlog of proposed regulations is making its way through the Federal Register. Once a regulation proposal is published in the Federal Register, interested parties will have 30 days to submit their comments

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to the SEC. Most comments are due within 45 to 90 days after publication.

During the SEC meeting on Wednesday, Hester Peirce, the lone Republican commissioner, objected to the short window for public comment. During his appearance at the Finance on the Blockchain conference Thursday, Peirce echoed Shapiro's concern that the new rule could adversely affect crypto operations, despite its stated purpose.

People in the crypto space who operate or plan to launch any kind of trading venue should pay attention to this release because it is very detailed, she said. Think about how it might apply, and consider writing a comment letter to help us work through those issues."

Despite a rise in the price of Bitcoin BTCUSD, -0.79% and ether ETHUSD, -0.42% on Friday, both remain down more than 20% on the year, according to Dow Jones Market Data.

Earlier this week, the American COMPETES Act of 2022, designed to boost U.S. semiconductor production and other research and development, caused another scare for crypto advocates. Although the bill is being marketed as a measure that would give U.S. industry a technological edge over China, it contains provisions that would provide the Treasury Department more extraordinary powers to combat money laundering.

According to Jerry Brito, executive director of the crypto advocacy group, the bill "would give the Treasury Secretary unchecked discretion to prohibit financial institutions (including cryptocurrency exchanges) from providing access to cryptocurrency networks," Coin Center reported.

"Any transaction involving any domestic financial institution is subject to the unchecked power of the secretary," he said. Money laundering concerns can be solved in a dangerously authoritarian manner."

In contrast to their failed effort to remove new crypto tax reporting requirements from last year's bipartisan infrastructure deal, crypto lobbyists appear confident that they can have the text amended to alleviate some of their concerns.

Kristin Smith, executive director of the Blockchain Association, a crypto industry group, said, "We're having constructive discussions with decisionmakers who are open to suggestions.".

The bill "would give the Treasury Secretary unchecked discretion to prohibit financial institutions (including cryptocurrency exchanges) from providing access to cryptocurrency networks,"

Jerry Brito

Executive Director of the crypto advocacy group