Discussion on cryptocurrencies in the Russian Federation and Binance’s investments in crypto projects. Key events of the week

Bitcoin has fallen by 3,4% over the past week. The asset reached the highest values on April 4, when 1 BTC was trading at $47 299, the lowest values were recorded on April 7, at $42 899 per coin. As of April 8, the bitcoin exchange is $43 560 (according to the CoinMarketCap portal).

The second-largest cryptocurrency by capitalization, Ethereum, has fallen in price by nearly 0,2% over the past seven days. Over the same period, the price of the native token of the Binance cryptocurrency exchange (BNB) declined by 0,6%.

The total capitalization of the crypto market fell from $2,18 trillion to $2,12 trillion during the week, with bitcoin dominating 41,4%. Ethereum’s share is 19,4%.

Discussion of the status of cryptocurrencies in Russia

Denis Manturov, head of the Ministry of Industry and Trade, stated that the Ministry of Industry and Trade and the Ministry of Construction, together with other federal agencies and representatives of the business community, prepared proposals to establish an experimental legal regime for mining. The proposals have been sent to the Government of the Russian Federation.

The Ministry of Industry and Trade also came up with an initiative to oblige Russian miners to use only domestic equipment for mining cryptocurrencies. The department believes that this will help to level information security risks

At the same time, Ksenia Yudaeva, Deputy Chairman of the Central Bank, responded to a number of points of the package of proposals on the regulation of the crypto market in Russia, compiled by State Duma Deputy from United Russia Anton Gorelkin. Yudaeva criticized digital assets, equating them with Ponzi schemes, and also stated the threat of the ruble being replaced by cryptocurrencies as the primary means of payment.

The Ministry of Finance of Russia finalized and submitted a draft federal law “On Digital Currency” to the government for consideration. The department clarified and concretized some provisions of the document, including those related to mining. The draft law provides for comprehensive regulation of the crypto market, including the procedure for issuing digital currencies and performing transactions with them.

Before the end of the spring session (until July 31, 2022), the State Duma may adopt amendments to the Tax Code of the Russian Federation on the regulation of cryptocurrencies. This was reported by Anatoly Aksakov, head of the State Duma Committee on Financial Markets. The lawmakers plan to recognize bitcoin and other digital assets as property, as well as introduce mandatory reporting on the turnover of cryptocurrencies in excess of 600 000 Russian rubles per year.

Russians’ investments in cryptocurrency

More than 10 million Russian residents opened cryptocurrency wallets and transferred more than 10 trillion Russian rubles to them. This was reported by Russian Prime Minister Mikhail Mishustin during the government’s annual report to the State Duma. The government opposes the recognition of cryptocurrencies as a means of payment, the prime minister added. In his view, it is necessary to “work seriously” on the regulation of digital assets.

The Federal Taxation Service (FTS) may have obtained the data of more than 100 000 Russian users of the LocalBitcoins exchange for 2021. According to Andrey Tugarin, managing partner of GMT Legal, the cryptocurrency platform has long been sending information about all of its users to the Finnish tax office, which cooperates closely with Russia.

Binance’s investments in crypto projects

Binance led a $150 million funding round of Sky Mavis, the developer of the crypto game Axie Infinity. Animoca Brands, a16z, Dialectic, Paradigm, and Accel also invested in the company. The investment raised will be used to compensate for the funds stolen as a result of the attack on the Ronin Network sidechain.

In late March, a hacker attacked the Ronin Network sidechain used by Axie Infinity. With the exploit, the attacker withdrew more than $625 million in cryptocurrency (173 600 ETH and 25,5 million USDC). Following the hack, the Ronin team disabled the cross-chain bridge and the Katana non-custodial exchange. Sky Mavis promised users to reimburse all the funds that the hacker stole.

Also, the venture capital arm of the Binance cryptocurrency exchange announced its strategic investments in STEPN, a web3 application. STEPN is a move-and-earn app with GameFi and SocialFi elements. The total amount invested in the project is not disclosed.

In early April, the founder of the Binance exchange Changpeng Zhao was named the richest person in the crypto industry by Forbes magazine. His fortune was estimated at $65 billion. The ranking includes 19 billionaires who got rich working in the field of blockchain and digital assets.

GetBlock Magazine has prepared an article on which crypto exchanges can transfer funds from Binance under sanctions. Our piece explores trading platforms that remain neutral in the current situation and have not proclaimed any plans to limit functionality for users from Russia.

Other important news

According to a report by the analytical company Arcane Research, public companies account for 19% of bitcoin’s total hashrate. In January 2021, this figure reached only 3%. The analysts say that more and more mining companies are entering the stock exchanges. As of April 2022, there are 26 public companies that are engaged in bitcoin mining.

On April 5, the US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on the Garantex crypto exchange and the Hydra darknet marketplace. The OFAC investigation is based on recent sanctions against cryptocurrency exchangers Suex and Chatex, which, like Garantex, operated out of the Federation Tower in Moscow. This is stated on the US Treasury Department’s official website.

OFAC found that about $8 million in proceeds from ransomware such as Ryuk, Sodinokibi, and Conti passed through Hydra’s accounts. An analysis of known Garantex transactions revealed that transactions worth more than $100 million related to illegal activities. Almost $6 million of these came from the Russian hacker group Conti, and about $2,6 million came from Hydra. OFAC blocked all property of Hydra and Garantex that are located in the United States.