Russia proposes to allow businesses in the two special administrative regions to conduct cryptocurrency transactions to experiment with digital payments within a separate legal framework.
These two areas are located at two ends of the vast territory of Russia, aimed at experimenting with cryptocurrency transactions without affecting the Central Bank of Russia's regulations on the monopoly of the ruble domestically.
MAIN CONTENT
Businesses in the two special administrative regions on Russky and Oktyabrsky Islands can experiment with cryptocurrency payments.
The pilot mechanism under the Experimental Legal Scheme (ELR) aims to make progress in cryptocurrency management in Russia.
Experts' evaluations are positive but need approval from the Central Bank of Russia.
In which areas does Russia want to experiment with cryptocurrency payments and why?
The idea of allowing businesses in the two special administrative regions on Russky Island (Far East) and Oktyabrsky Island (Kaliningrad) to conduct cryptocurrency transactions was proposed by a Russian senator for the purpose of experimentation within a separate legal framework, avoiding impacts on national monetary regulations.
Alexander Shenderyuk-Zhidkov, Vice Chairman of the Budget and Financial Market Committee of the Federation Council of Russia, emphasized that businesses in these SARs are not considered Russian residents under monetary regulations, allowing them to conduct cryptocurrency transactions outside the narrow legal territory allocated for the ruble managed by the Central Bank of Russia.
Analysis of the current regulations on cryptocurrencies in Russia
Although cryptocurrencies have not been comprehensively regulated in Russia, they are recognized as assets for many legal purposes. However, the use of cryptocurrencies as a means of payment domestically is still prohibited under the regulations of the Central Bank of Russia (CBR).
Currently, Russia only allows cryptocurrencies in international commercial payments through a stringent legal pilot mechanism called ELR, intended for Russian businesses to circumvent international sanctions.
"We shouldn't take six years to perfect the law... ELR is a pilot regime to experiment and later apply widely."
Alexander Shenderyuk-Zhidkov, Vice Chairman of the Budget and Financial Market Committee, Federation Council of Russia, 2024
What is ELR and how does it affect the use of cryptocurrencies in Russia?
ELR is a pilot regime that allows Russian businesses to use cryptocurrencies in foreign trade payments, under the close supervision of the Central Bank of Russia. However, details about the scope and the businesses allowed have not yet been widely disclosed.
Mr. Zhidkov believes that the implementation of ELR is too slow and proposes to expand its application to businesses in the two SARs, thereby facilitating the attraction of foreign businesses with Russian origins and preventing asset outflows abroad.
How do experts evaluate the pilot proposal for cryptocurrency payments in Russia?
According to Mikhail Uspensky, a member of the expert council on cryptocurrency regulation at the State Duma, this proposal is feasible and will help increase the number of partners allowed to make payments with cryptocurrencies, promoting the development of the cryptocurrency market in Russia.
Maria Agranovskaya, CEO of Agranovskaya & Partners, emphasizes that this idea needs to be implemented cautiously, in compliance with the law, and particularly requires the consensus of the Central Bank of Russia.
"The idea is very reasonable, but the implementation must comply with strict legal regulations... The opinion of the Central Bank of Russia is the most important."
Maria Agranovskaya, CEO, Agranovskaya & Partners, 2024
The history and current status of special administrative regions in Russia
By the end of 2024, nearly 500 businesses have registered in Russia's special administrative regions, taking advantage of flexible tax incentives and monetary regulations. Among them are large technology groups like Yandex.
Previously, in 2018, the Russian Ministry of Finance proposed leveraging special administrative regions (SARs) for cryptocurrency transactions like Bitcoin, but they later seemed to lean towards the conservative stance of the Central Bank of Russia in limiting cryptocurrency activities within the territory.
What are the difficulties and challenges in implementing this proposal?
The proposal still needs to go through multiple approval steps from regulatory agencies, especially the Central Bank of Russia. Balancing the promotion of financial innovation and controlling legal and financial risks is a significant challenge.
Furthermore, the lack of a comprehensive legal framework for cryptocurrencies in Russia also raises questions about the effectiveness and safety of these experiments.
What do experts say about the market and policy impacts?
Experimenting with cryptocurrency payments will expand the legal space for digital transactions in Russia while contributing to the repatriation of capital and technology from companies with Russian origins but operating abroad.
It also means a significant step forward in balancing policy between state control and the need for technological development in the cryptocurrency market.
Frequently Asked Questions
1. What is a special administrative region (SAR) in the context of Russia?
SAR is an area with a special regime of taxation and currency management, allowing businesses to operate with various incentives to promote investment and innovation.
2. What is ELR in Russia and how does it affect cryptocurrencies?
ELR is a legal pilot mechanism that allows the use of cryptocurrencies in foreign trade transactions under the supervision of the Central Bank to avoid financial risks and ensure compliance with the law.
3. Are cryptocurrencies allowed to be used in payments in Russia?
Currently, cryptocurrencies are only used within the framework of ELR and are not permitted for widespread domestic payment transactions under the regulations of the Central Bank of Russia.
4. Who proposed allowing the experiment of cryptocurrency payments in the two SARs?
Mr. Alexander Shenderyuk-Zhidkov, Vice Chairman of the Budget and Financial Market Committee of the Federation Council of Russia, is the one who proposed this.
5. How will this proposal affect the cryptocurrency market in Russia?
The expansion of the pilot program will help increase the number of organizations allowed to trade cryptocurrencies, creating incentives for development and attracting capital to the digital financial market in Russia.
Source: https://tintucbitcoin.com/nga-chon-dao-thu-thanh-toan-tien-dien-tu/
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