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Digital Ruble to Help Curb Use of ‘Money Surrogates,’ Russia Says in Financial Strategy Document

15/09/2021 by Idelto Editor

The launch of a digital ruble will be among Russia’s key priorities of digitalization this decade, the country’s financial market development strategy has confirmed. The document claims the issuance of a digital national fiat will help the central bank to prevent Russians from using “money surrogates” as officials have previously called cryptocurrencies.

Bank of Russia to Issue Digital Ruble by 2030, According to Financial Market Development Plan

The Strategy for the Development of the Financial Market of the Russian Federation by 2030 was released this week by the Ministry of Finance. The plan is open for public discussions between Sept. 14 and Oct. 13, 2021, according to a notice published by the State Automated Information System.

The strategy defines the launch of a digital version of the Russian ruble as one of the priority tasks in the field of digitalization, as Bits.media crypto news outlet reported. The digital ruble, the authors have pointed out, will become the third form of money issued by the Central Bank of Russia (CBR).

The central bank digital currency (CBDC) is expected to facilitate the development of Russia’s payment infrastructure and the introduction of innovative financial instruments. The digital ruble should also increase the availability of banking services for private and corporate users while reducing transaction costs.

Moscow hopes the digital ruble will allow it “to continue to discourage the use of monetary surrogates” which are banned under current law. Russian regulators have previously described cryptocurrencies using that term. The Finance Ministry insists money surrogates bring money laundering and terrorist financing threats, pose risks to Russian citizens while hindering macroeconomic policies.

Furthermore, Russia plans to proceed with the development of its Mir payment system, the country’s Faster Payments System and Financial Messaging System. Bank of Russia will implement Suptech and Regtech solutions to analyze transactions and monitor regulatory compliance in order to more effectively manage risks and ensure information security. The document notes:

In the context of the launch of the digital ruble and the development of payment instruments, the Government of the Russian Federation and the Bank of Russia will continue to oppose the use of monetary surrogates.

To ensure consumer protection, Russia will take into account international standards set by the Committee on Payments and Market Infrastructure, the International Organization of Securities Commissions and the Financial Stability Board, the strategy emphasizes. The digital ruble should enable authorities to better deal with crises and inflation as they maintain the stability of the Russian economy.

The publishing of the financial market strategy comes after the Bank of International Settlements (BIS) recently urged central banks to quickly develop their CBDCs to compete with payment initiatives in the private sector. At a financial forum in Slovenia, Benoît Cœuré, who heads the BIS Innovation Hub, warned monetary authorities should accelerate their work on state-issued digital currencies as “stablecoins and cryptoassets are already here.”

Speaking to reporters last week, President Vladimir Putin’s press secretary Dmitry Peskov stated that the Russian Federation is not ready to recognize bitcoin, insisting that such a move would not bring any benefits to the country. In May, Bank of Russia’s Deputy Governor Olga Skorobogatova announced that the CBR is preparing to present a digital ruble prototype by the end of 2021.

Do you think the digital ruble will limit the use of cryptocurrencies in Russia? Share your thoughts on the subject in the comments section below.

Crypto Mining Should Be Registered and Taxed in Russia, Financial Market Committee Chair Says

12/09/2021 by Idelto Editor

Cryptocurrency mining should be registered as entrepreneurial activity and taxed as such, according to Anatoly Aksakov, chairman of Russia’s parliamentary Financial Market Committee. The lawmaker also thinks Russian digital currency regulations need refinement.

Amendments Likely to Affect Mining, Taxation, Definition of Digital Currency

Discussing upcoming changes in the legislation regarding digital currencies in Russia, head of the Financial Market Committee in the State Duma, Anatoly Aksakov, expressed his opinion that cryptocurrency mining should be added to Russia’s register of entrepreneurial activities and taxed accordingly.

The treatment of crypto mining and the taxation of cryptocurrency-related operations are among the areas that are likely to be affected by the legal amendments to be adopted during the fall session of the Russian parliament. Speaking to Tass news agency on the sidelines of the Moscow Financial Forum this week, Aksakov elaborated:

Since this is a type of entrepreneurial activity, obviously, it is necessary to enter it into the register, assign a corresponding code and introduce taxation.

The parliamentarian was positive that amendments concerning digital currencies are to be expected as the Duma has already adopted on first reading a law dealing with the taxation of “in fact, cryptocurrencies.” Earlier this month, Chairman of the Committee on Legislation Pavel Krasheninnikov told Interfax that he hopes the law will hit the floor of the lower house again in the coming months.

Anatoly Aksakov further noted that the use of the legal term pertaining to cryptocurrencies, as it’s now defined, causes confusion. The concept of “digital currency” can refer to a central bank digital currency (CBDC) issued by the Bank of Russia but it can be understood as cryptocurrency as well, the lawmaker explained. Aksakov thinks the two should be clearly distinguished.

The Financial Market Committee chairman insisted more discussions are needed to determine what “digital currency” actually means. Although cryptocurrency is referred to as digital currency in Russian law, Aksakov pointed out that it is used as a financial instrument and financial asset for investment purposes rather than as a means of payment.

The high-ranking member of the Russian parliament added that Bank of Russia’s powers to issue a digital ruble and maintain its circulation should also be defined. The monetary authority announced a plan to digitalize the national fiat currency last October. The central bank is preparing to issue a prototype of the CBDC by the end of this year.

What are your expectations about the upcoming legal changes regarding cryptocurrencies and related activities in Russia? Let us know in the comments section below.

Russia Not Ready for Bitcoin as Legal Tender, Putin’s Spokesman Peskov Says

08/09/2021 by Idelto Editor

Russia has no reason to recognize bitcoin, President Putin’s press secretary has noted after El Salvador became the first country to adopt the digital coin as legal tender. In a statement to the press, Dmitry Peskov revealed he is convinced that such a move would not bring any benefits to the Russian Federation.

Kremlin Not Open to Bitcoin Adoption in Russia

The government in Moscow sees no reason to recognize bitcoin at this point, according to Dmitry Peskov, press secretary of Russian President Vladimir Putin. Describing it as a quasi-currency, the Kremlin representative insisted that equating bitcoin to official monetary instruments wouldn’t do anything but harm Russia’s financial and economic system. Speaking to reporters, Peskov emphasized:

Clearly, Russia is not ready for such steps.

The statement, quoted by RIA Novosti news agency on Tuesday, came as the Republic of El Salvador became the world’s first country to recognize bitcoin (BTC) as legal tender for payments in its jurisdiction. On Sept. 7, El Salvador’s Bitcoin Law came into effect, making the leading crypto by market cap a national currency alongside the U.S. dollar, as Bitcoin.com News reported.

Residents of the small Central American nation can now pay for goods and services using the cryptocurrency as all prices can be denominated in BTC. Furthermore, taxpayers can use bitcoin to cover their obligations to the state. On Monday, President Nayib Bukele revealed his government had also started purchasing BTC, later announcing that the country had acquired 200 coins, bringing the total it holds to 400, and then “buying the dip” with another 150 coins when the price fell to below $43,000.

Russia, on the other hand, is a long way from accepting any cryptocurrency as legal tender. Moscow partially regulated coins and tokens with the new law “On Digital Financial Assets” which entered into force at the beginning of this year. Its provisions recognize cryptocurrencies as property but prohibit their use for payments.

According to the country’s current legislation, the national fiat ruble remains the only legal tender, and “money surrogates” are banned in the Russian Federation. Bank of Russia, the country’s central bank which has categorically opposed the adoption of decentralized digital money, is preparing to launch a digital ruble prototype by the end of 2021.

Russian media reported in May, however, that members of the State Duma, the lower house of Russia’s parliament, had started working on amendments to the Civil Code that would permit the use of crypto assets as contractual means of payment. If approved, the changes will allow parties to a contract to pay each other with cryptocurrency, only under the terms of their agreement.

Do you think Russia will change its position on cryptocurrencies in the future? Share your expectations in the comments section below.

Russia’s Roskomnadzor Watchdog Blocks 6 VPN Providers

05/09/2021 by Idelto Editor

Russian communications watchdog, Roskomnadzor, has restricted another six VPN providers. The agency says the platforms have facilitated access to information that is banned in the Russian Federation. Roskomnadzor is also whitelisting certain VPN services that operate in accordance with the law and are used by Russian companies.

Roskomnadzor Bans More VPN Platforms in Russia

Russia’s Federal Service for Supervision of Communications, Information Technology, and Mass Media, Roskomnadzor, has restricted access to another batch of VPN service providers. In accordance with a government decree issued in February 2020, “a decision was made to block 6 more VPN services that violate Russian law,” the watchdog explained in a notice published Friday.

The affected platforms are Hola! VPN, Express VPN, Keepsolid VPN Unlimited, Nord VPN, Speedify VPN, and IPvanish VPN. The regulator insisted their services allow users to maintain “access to prohibited information and resources,” creating conditions for illegal activities such as those related to the distribution of drugs and spreading of extremism.

Earlier this year, Roskomnadzor banned two other VPN providers, Vyprvpn and Operavpn, citing identical reasons. The federal supervisory body described as “effective and justified” the technical means it’s using against services helping Russians to bypass its restrictions.

Such measures are often applied to websites with crypto-related content. Last August, Roskomnadzor took down the popular exchange aggregator Bestchange.ru and in March 2020, the agency added six crypto sites to its register of banned internet sources. This past June, a court in the Perm region announced its decision to block several websites providing information on cryptocurrency trading.

Watchdog Whitelists Some VPNs Used by Russian Businesses

In its latest announcement, however, Roskomnadzor also revealed it’s now whitelisting certain VPN services. The move aims to avoid disrupting the operations of software programs and applications that are not in breach of the current Russian legislation and “use VPN services for technological purposes.”

The decision to do that comes after the agency received requests from 64 industry organizations, 27 of which are using VPN connections to support 33 technological processes. Roskomnadzor has been presented with more than 100 IP addresses that need to be exempted from its access restriction policies.

The regulator further emphasized that while the VPN services violating the law in the Russian Federation have been blocked completely, the VPNs used by Russian companies that were added to its whitelist have continued to function smoothly.

Do you think Russian authorities will continue to block VPN providers and crypto websites? Share your thoughts on the subject in the comments section below.

Scammers Offer Free Bitcoin on Hacked Government Site in Russia as Crypto Fraud Surges

05/09/2021 by Idelto Editor

Unknown scammers have organized a fake bitcoin giveaway through a Russian government website they hacked. The news of the attack comes after a recent report revealed that damages from crypto-related fraud in Russia have reached $30 million in value in the first half of this year.

Regional Government Website in Russia Hacked by Scammers

The main website of the local administration in the Russian city of Ryazan, around 200 km southeast of Moscow, has been targeted by hackers twice in a single day, Rzn.info reported quoted by the crypto news outlet Forklog. The unidentified attackers published an ad offering cryptocurrency to those who download a special application.

The scammers initially promised to send 0.025 ВТС to every visitor who installed the app. They later changed the offer to a prize of $1,000 in bitcoin for each of five randomly chosen participants in what was advertised as the “Ryazani online lottery.” Both ads have already disappeared from the mayoral site but the local news outlet published a screenshot of one of the ads.

Crypto Fraud in Russia Valued at $30 Million This Year

The volume of cryptocurrency-related fraud around the world has increased significantly in 2021. In the first half of the year, losses amounted to an estimated $1.5 billion, which is two to three times more than the total registered during the same period of last year, experts from the IT security company Zecurion told the Russian daily Izvestia.

According to the report published earlier this week, the Russian Federation accounts for 2% of the global amount – some $30 million, or almost 2.2 billion rubles. Analysts believe the main reasons for the spike stem from the growing exposure of users to digital assets as well as the desire to make quick profits in an expanding sector with limited regulations, amid volatility in the traditional financial markets. They also expect crypto fraud to continue to rise this year leading up to a 15% annual increase.

In July, the Central Bank of Russia (CBR) announced it had identified 146 financial pyramid schemes in the first six months of the year. The number is 1.5 times higher in comparison with the same period of 2020. Fraudsters often lure people with weak financial literacy into investment scams linked to cryptocurrencies or crypto mining, the regulator said. The CBR attributed the surge to the increasing activity of “unfair market participants” and investment demand in Russia.

Blockchain forensics firm Chainalysis revealed this week that crypto addresses based in Eastern Europe have sent $815 million of digital currency to scams in a single year. Over half of the money transferred to scam addresses from the region went to the Russia-based Ponzi scheme Finiko. The pyramid was targeting crypto holders in Russian-speaking populations in the former Soviet space with promises of 30% monthly returns before it collapsed in July.

Do you agree with experts’ expectations that crypto-related fraud will continue to increase this year? Share your thoughts on the subject in the comments section below.