UPDATE 2: Finance Ministry expects govt to get cryptocurrency bill soon

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MOSCOW, Aug 28 (PRIME) -- Russia’s Finance Ministry expects a bill on the cryptocurrency to be submitted to the government shortly, and regulations will be aimed at protecting buyers and sellers of cryptocurrencies legally, Deputy Finance Minister Alexei Moiseyev said on Monday in an interview to the Rossiya 24 television channel.

“There is a point of view that such cryptocurrencies as the bitcoin are a financial pyramid. It’s hard to argue with this point of view. Such investments are highly risky. It determines our approach to their regulation. We suggest regulating them as other property and qualify them as an asset. We think only professional investors could buy and sell them on the bourse,” Moiseyev said.

The Finance Ministry is discussing the matter with the central bank and the Moscow Exchange. “We want people who are qualified investors and want to invest would do that only via the Moscow Exchange,” he said.

“It’s done to ensure protection of rights of buyers and sellers, to ensure the execution of a contract if any party of the contract fails to be reliable. It’s impossible now. Now people do it at their own risk. They don’t have any legal protection. This is our goal number one,” Moiseyev said.

“We see that the number of cases of cryptocurrencies use for illegal operations has multiplied in Western Europe and even in our country. It roots in the fact that mechanisms against money laundering are not applicable to cryptocurrencies. This is our goal number two why the bourse is engaged.

“So that the regulator in the person of the Federal Financial Monitoring Service would know who sells and who buys these bitcoins, because there are precedents when money was laundered via sales and purchases of bitcoins. It must be ruled out,” the official said.

Only qualified investors will be authorized to buy and sell cryptocurrencies. “Ordinary people won’t be allowed (to do it), of course, because it’s a very dangerous investment, which may result in money losses,” Moiseyev said.

The country has the “qualified investor” notion, which can mean an individual who, under international practice, passes certain tests to receive a status of a qualified investor, the deputy minister said.

Arseny Shcheltsin, director for project activities at the Internet Development Institute (IDI), said that excitement about the bitcoin and blockchain, the technology used in the bitcoin, creates excessive expectations among investors, while creation of comfortable conditions for investment will require cooperated work of the government and the industry to determine an approach to cryptocurrency regulation.

“Mr. Moiseyev’s position is highly interesting. At the same time, we hear an opinion that it’s a financial pyramid, which, as a rule, is illegal and results in breaches of contributors’ rights. On the other hand, he speaks about a highly risky investment. It is commonly known as venture investment and is quite legal and actively used,” the expert said.

The key task of legal regulation of cryptocurrencies is to attract investment in an environment that would be most comfortable and appealing for the government and business by means of a new, isolated, well-adjusted mode of work of cryptocurrencies and operations with them, as well as a legal status of miners, he said.

Mining is the process of adding transaction records to the bitcoin’s public ledger of past transactions.

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