The Central Bank again criticized the Ministry of Finance’s plan to regulate cryptocurrency and proposed amendments to ban its circulation

The regulator calls cryptocurrencies a “financial pyramid” and believes that their regulation will only create the “illusion of state protection.”

The Bank of Russia presented its objections to the concept of regulating the circulation of cryptocurrencies, which was developed by the Ministry of Finance. with the letter Forbes got acquainted , the regulator confirmed its sending to the department.

The Central Bank believes that:

• The legalization of digital currencies will create conditions for increased investment in an instrument that is, in fact, a “financial pyramid.” Investment limits for unqualified investors will not eliminate these risks.
• Identifying qualified investors requires the investor to weigh all risks based on their knowledge. But cryptocurrency rates depend on speculative factors. In addition, if a cryptocurrency is banned by a foreign regulator, it will significantly depreciate, and in this case, financial literacy will not help the investor.
• If regulated financial institutions participate in the circulation of digital money, this will create the “illusion of state protection” among people. And in the event of a collapse in cryptocurrency rates, they will demand compensation for their losses from the budget.
• The mining industry will not benefit the economy: its competitiveness in the country is not related to the development of technology, but to cheap electricity. At the same time, unproductive demand for it can limit production and jeopardize the energy supply of enterprises and residential properties.
• Cryptocurrencies create risks of withdrawing money from the real economy, the stock market and the banking sector, and other threats.
  

This is how the Central Bank responded to the January plan of the Ministry of Finance. In particular, the department proposed dividing clients into qualified and unqualified investors, launching a system for analyzing cryptopayments, creating cryptocurrency exchange operators, and more.

In February 2022, the ministry also proposed limiting the purchase of cryptocurrency for unqualified investors to 50 thousand rubles. The concept of the Ministry of Finance was approved by the government. The department and the Central Bank must prepare a joint bill by February 18, 2022.

On February 15, a meeting was held on the circulation of cryptocurrencies in Russia: it was attended by the head of the Central Bank Elvira Nibiullina, Finance Minister Anton Siluanov and Deputy Prime Minister Dmitry Grigorenko. According to the publication’s source in the Bank of Russia, the positions of the Ministry of Finance and the Central Bank have not converged, and there will be a new discussion. The Ministry of Finance did not respond to the publication’s request.

Proposals CB

The Bank of Russia also sent to the Ministry of Finance draft amendments to the law on digital financial assets. He offers:

• Prohibit legal entities and individuals from activities that “contribute to the organization of the issuance, issuance, organization of circulation of private digital currency on the territory of Russia or abroad.”
• Prohibit financial institutions from owning private digital currencies.
• In Russia, it is prohibited to disseminate information not only about the acceptance of digital currency as a means of payment, but also about the organization of the issue, issue or organization of circulation of cryptocurrency.
• Banks will have to refuse a transfer if “the credit institution has information” about the involvement of the transfer recipient in the issuance or circulation of cryptocurrencies.
• Similar restrictions apply to telecom and postal operators.

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