With a second hearing scheduled for the autumn session of the State Duma at the lower chamber of Russia’s Parliament, Russia’s draft law on digital financial assets has been edited again in a rather unexpected way. A confusing decision by lawmakers has seen the definition of crypto mining removed from the text containing proposals for regulating crypto assets in the country.
Anatoly Aksakov, chairman of the Duma committee on financial markets, in an interview for Interfax, tried to justify the decision on the sidelines of the Finopolis 2018 conference, “Earlier, we had been considering the matter of Bitcoins and their possible integration into our economic system. But since we came to the conclusion that we don’t need these incomprehensible Bitcoins, consequently, we don’t need mining as well.”
The Issue At Hand
The new law will not address the issue of taxing crypto miners with its definition missing from the law book, though the industry has been looking forward to any move on the issue as a demonstration of the stance taken by Russian authorities on the matter.
The crux of the matter as Aksakov put is that the authorities are not enthusiastic about Cryptocurrencies and don’t want the technology to take over in the nation. He explained that within the regulatory framework proposed by the bill, the concept of crypto mining is absolutely “meaningless” and added defining “mining” would also demand defining “cryptocurrency”, although there is no reason to do it since Russia is not interested in regulating the industry.
Previously, the draft defined “mining” as the process of creating cryptocurrency, as well as the practice of rewarding entities for validating cryptocurrency transactions. Mining was subject to taxation when an operation’s electricity consumption exceeded certain limits since it was recognized as an economic activity that could be performed by both companies and individual entrepreneurs.
An ongoing struggle
The industry has been airing their dissatisfaction at the existing regulations for a while now, according to Artem Tolkachev, the self-proclaimed “first” lawyer in the Commonwealth of Independent States (CIS) to begin working with Bitcoin (BTC) and blockchain startups, the current version of the crypto and blockchain legislation — which takes its form in three draft bills — has not lived up to his expectations.
Tolkachev who has been chairman of the Russian Blockchain community since 2016 and founded the Blockchain Lab at Deloitte CIS said “I spent around two years discussing with the central bank, the Ministry of Finance, the Ministry of Economic Development, the general security service and all [the] other guys [about] how we can regulate this stuff. And I was trying to sell the idea […] that we can be the country who attracts that kind of business and have the crypto-friendly environment here. Unfortunately, we have what we have. What can I say? That’s it.”
He was also critical of the lawmaker’s recent decision to remove all reference to Cryptocurrency from the lawbook, “According to these draft laws, none of the existing cryptocurrencies, especially cryptocurrencies with nothing behind [them], for example, Bitcoin […] will be allowed in Russia. It wouldn’t be under the scope of this legislation at all. According to the three bills, we can talk only about some kind of asset-based tokens, not about cryptocurrency.”
Aksakov noted that Russian officials are no longer thinking about integrating cryptocurrencies into the national economy. “Since we decided we don’t need them, mining is not needed either,” Interfax quoted him as saying. It remains unclear if the definitions for tokens and initial coin offerings (ICOs) are still included in the current version of the draft law as digital currencies, mining, and ICOs remain without legal status in Russia.
Elsewhere, Albania to welcome the Industry with New Crypto Regulatory Framework
Albania is set to introduce new cryptocurrency regulations in an ambitious move to invite new investment opportunities in the country and turn the nation into a regional hub for Cryptocurrency.
Edi Rama, the country’s Prime Minister, believes that Albania has the capability to become a crypto-friendly hub for potential investors as he explained that, “As part of our effort to open up new markets and create new opportunities for well-paid jobs and qualified people… we are exploring the possibility of setting up a regulatory framework on cryptocurrency which is a shocking novelty nowadays and where the opportunity to be innovative and set up a center of gravity for innovative financial markets is open for every country despite their level of development.”
The head of the Albanian Financial Supervisory Ervin Koci, informed investors that it hasn’t licensed any company to issue digital currencies just yet as the regulations are still being worked on. The Bank of Albania further noted that it could not guarantee fulfillment of customer protection from any unforeseen loses because the activity of digital currency operators was characterized by high level of insecurity and risk.