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​Controversy over regulation of the crypto market and new restrictions for citizens of the Russian Federation. Key events of the week

15.04.2022 - 10:40

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6 min

The bitcoin exchange rate has fallen by 8% over the past seven days. The asset reached the highest values on April 8, when 1 BTC was trading at $43 887, the lowest values were recorded on April 12, at $39 420 per coin. As of April 15, the bitcoin exchange rate is $40 110 (accoring to the CoinMarketCap portal).

The second-largest cryptocurrency by capitalization, Ethereum, has fallen by 7% in the past seven days. The native token of the Binance cryptocurrency exchange (BNB) fell in price by 4,20%.

The total capitalization of the crypto market fell from $2,022 trillion to $1,88 trillion over the week, with bitcoin dominating 40,7%. Ethereum’s share is 19,5%. As can be seen on the infographic of the Coin360 portal, most of the assets are in the red zone on April 15.

Source: Coin360

New restrictions for Russian citizens

Last week, the EU authorities imposed the fifth package of sanctions which includes restrictions on investments of residents of the Russian Federation in cryptocurrencies. The total amount of investments cannot exceed €10 000. This measure is aimed at preventing oligarchs from bypassing sanctions on investments in the EU by using cryptocurrencies.

Previously, similar measures were imposed in relation to bank accounts. The restrictions dated February 25, 2022, prohibit Russians from transferring more than €100 000 to bank accounts in the EU.

Currency.com users have begun receiving notifications that the exchange is suspending operation within the Russian Federation. The letters received indicate that the suspension of service will only affect residents of the Russian Federation.

Regulation of the crypto market in Russia

Cryptocurrency mining continues to be an actively discussed topic in the government. This week, the Ministry of Economic Development proposed to connect mining farms to power sources at reduced tariffs. The department indicated that such tariffs should be valid regardless of the point of connection. The Ministry of Economic Development also proposed allowing cryptocurrency mining activities in regions with a stable surplus of electricity: the Irkutsk, Murmansk, and Novosibirsk regions, the Khabarovsk, and Krasnoyarsk territories, and Khakassia. According to the department, this will remove the risks of insufficient power supply to housing and other social and industrial facilities.

The State Duma supports the idea of legalizing mining but believes that only legal entities should engage in this activity. This was announced by the head of the State Duma Committee on Financial Markets Anatoly Aksakov. He argued that such a business should be regulated.

Another important news was the statement of the Ministry of Finance of the Russian Federation on the importance of digital assets for the country’s financial market. Director of the Financial Policy Department Ivan Chebeskov believes that qualified personnel and clear regulation are needed for the development of the cryptocurrency industry.

Another initiative of the Ministry of Finance is dedicated to defining the concept of a qualified crypto investor. The department amended the draft law “On Digital Currency.” The concept of a qualified investor has been replaced with a professional cryptocurrency acquirer. A professional acquirer of digital assets will be considered an individual who is recognized as such by a cryptocurrency exchange operator or trading platform. The document retained the condition according to which citizens will be able to invest up to 600 000 Russian rubles (RUB) per year in cryptocurrency after successfully passing the test. If the test is not passed, the maximum amount will be limited to 50 000 RUB. For individuals who will receive the status of a professional entrepreneur, the limit on the amount invested in digital assets will be lifted.

The Bank of Russia stated that the growth of the cryptocurrency market largely reflects the formation of a bubble. The Central Bank warned that the possibilities for legal protection of investors are extremely limited. Investments in cryptocurrencies can be completely lost both due to the volatility of the exchange rate and as a result of fraudulent actions and cyber threats.

Another interesting news was the proposal by the head of the Chamber of Commerce and Industry (CCI) of Russia, Sergey Katyrin to use cryptocurrencies and national currencies when making payments with countries of the African continent. This measure is intended to help the country’s economic development in the face of sanctions pressure.

Global adoption of cryptocurrencies continues

Próspera, a special economic zone located on the island of Roatan in the Western Caribbean and Northern Honduras, announced the adoption of bitcoin as a legal tender. In addition, bitcoin bonds can be issued in the zone using standards for AML (anti-money laundering) and KYC (know-your-customer). And the town of Serodino, an Argentinian commune, announced the launch of a new initiative to get out of a difficult economic situation. The authorities plan to purchase a cryptocurrency mining farm to extract additional financial resources to fight inflation and develop the commune.

Brazil may have its own national cryptocurrency, the digital real, as early as the second half of 2022. This was announced by the president of the Central Bank of Brazil (BCB) Roberto Campos Neto. The BCB will digitize the Brazilian currency “without creating a rupture in the banks’ balance sheets,” Neto stated during his speech at the event of Traders Club. It is not yet known whether the digital asset will be available to the general public.

On April 12, the US Depository Trust and Clearing Corporation (DTCC) announced the development of a prototype to study a central bank digital currency (CBDC). The creation of the prototype is aimed at studying how the digital dollar may operate in the US settlement and clearing infrastructure using distributed ledger technology (DLT).

Earlier, Democratic Senator Elizabeth Warren called for the Fed to accelerate the development of the digital dollar. She believes that with CBDC, central banks could improve a lot in the digital industry of the financial market.

Author:

Michael Golikov Michael Golikov

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