Sergey Mendeleev, the founder of the Garantex cryptocurrency exchange, talks about the future of cryptocurrencies in Russia.
The bill presented to the Russian State Duma in May 2020 could actually prohibit cryptocurrency trading in the country. This will help stop the anarchy that reigns in the Russian crypto industry. But this document had a negative reaction from the crypto community and experts. The Ministry of Economic Development and the Ministry of Justice reacted negatively, pointing out that many important things were not spelled out in the bill.
Sergey Mendeleev focused on the main point – the prohibition of the use of information infrastructure under the new law. That is, it will not be possible to use Russian domains, websites, hosting, etc. But if ordinary citizens use their smartphones to work with cryptocurrencies on Western exchanges, it is not clear whether this can be considered an object of information infrastructure.
And if the answer is yes, then cryptocurrency trading in Russia is in an incomprehensible state. After all, exchanges in the Russian Federation may be subject to criminal prosecution, like ordinary people offering services to citizens of the country for the sale / purchase of digital coins. This will lead to the fact that many citizens will not be able to carry out operations with cryptocurrency. Among them are residents of South Korea, USA, Singapore, and a number of other jurisdictions. It can be concluded that the state has introduced a field of restrictions, and foreign crypto-exchanges, avoiding persecution, will refuse to cooperate with Russian citizens.
It is also unclear when a smartphone is used to trade cryptocurrency, at what point it will not be considered a participant in the Russian information infrastructure. There are many controversial, dubious nuances that require clarification.
The founder of the Garantex crypto exchange notes that the draft law contains some kind of arbitrary treatment of interpretations that define the concept of cryptocurrency. It is forbidden to trade tokens that do not have a person obliged under them. This applies to Bitcoin or Ethereum, which do not have a central issuing authority, as well as independent miners. Lucky cryptocurrency Tether (USDT) and a number of other stablecoins, they have persons related to tokens. They do not have a specific structure in charge of them, ensuring the obligations of payments on these stablecoins are real fiat funds.
Sergei Mendeleev notes the need to finalize the law in terms of the clarity of the definition of some concepts. For example, according to the law, it is possible to trade in USDT tokens, which turned out to be allowed, in contrast to bitcoin and others. All independent coins, which are cryptocurrencies, were outlawed. In addition, the document does not indicate the rules for issuing digital financial assets in the information system (based on foreign law), there is no set limit on the amount of transactions with digital financial assets of legal entities of the Russian Federation, and other points requiring revision in the law.
The opinion of the founder of the Garantex crypto exchange about the penalties introduced by the new law is such that the law gives a clear separation of the concept of currency values and digital rights. He gave permission to turnover digital moment by introducing article 141.1 of the Civil Code. It clearly regulates currency values. Obtaining a license will allow for exchange and other foreign exchange transactions. And here it becomes clear that with a complete ban on cryptocurrency trading and everything related to this, Article 141.1 would not have been included in the Civil Code. And if the legislator did not do this, then the regulators made an attempt to prohibit by introducing serious sanctions in the form of amendments to the criminal code. And they provide for harsh penalties for cryptocurrency transactions. Simply put, for clandestine operations with ordinary currency, a person will be fined for the full amount of the transaction. And for organizing a cryptocurrency exchange office, up to 7 years in prison is provided. Agree, this is not logical and strange.
As for Garantex’s plans for the future under the new conditions, Mendeleev says that they have already thought out ways of fully complying with the legislation, observing the necessary parity basis for free trade. After all, like the Estonian crypto exchange Garantex, with a complete prohibition by this law, without violating it, it will not be able to work. Several methods have been developed to overcome some of the obstacles. For example, cryptocurrency trading will be carried out outside the Russian Federation, without using the Russian information structure inside the platform, these are domains, servers, etc. Everything will be foreign – from licenses to registration. Replenishment, withdrawal of funds will be made by analogy with the methods of webmoney and qiwi wallets. Nevertheless, the owner of the platform predicts significant difficulties for the Russian cryptoindustry.