Crypto-ruble and the digital economy: when will the blockchain be legalized in the Russian Federation?

Laws on blockchain being prepared in the State Duma are a holiday for IT entrepreneurs.

Russian President Vladimir Putin announced the need to legitimize the blockchain even before the message to the Federal Assembly, but it was there that the sacramental phrase sounded. At the end of February, the President met with the Chairman of Sberbank, German Gref, and he complained about the lack of regulation in the field of blockchain and cryptocurrencies, which hinders the state, miners, and startups. “Those who are late in this competition will become completely dependent on the leaders of this process,” stated Putin, referring to other countries. "We need a breakthrough, and we need to ensure it." How do legislators provide it?

A recent letter to Putin from Finance Minister Siluanov detailing blockchain and cryptocurrency is a second landmark event that points to major advances in lawmaking soon. The state machine has long been approaching the "blockchain hype": over the past couple of years, several draft laws and regulations have appeared that have not yet been adopted. But lately they have been published at regular intervals several times a month, and here is also the attention of the President. It seems that we have budged, and there is no turning back. Blockchain will be legalized, and this is good news for IT entrepreneurs.

Officials' first reaction to the blockchain was scary. They wanted to ban the cryptocurrency, just in case, and punish its issuers. In February 2015, the Ministry of Finance issued a draft law "On Amendments to the Code of Administrative Offenses of the Russian Federation", which introduces the concept of "monetary surrogates", and for their application a fine of up to 5 million rubles is imposed and the suspension of the company's activities for up to 90 days. About a year later, the Ministry of Finance issued a draft "On Amendments to the Criminal Code", and in it the punishment for "surrogates" is even more severe - up to 5 years in prison. None of the projects clarified this term, but everyone understood that it was about "crypt".

We followed the process of reviewing these two laws, and what is interesting is that they have already passed the necessary stages of coordination before being sent to the State Duma. Now, if necessary, they can go through all three readings in the Duma in a few days and be accepted, but the authorities have forgotten about them, as if, and they are in reserve.

Digital economy. The authorities did not recall the blockchain until December 2017, and then it began. The Ministry of Communications and Mass Media Alexei Kozyrev made a report in the Federation Council on the need for changes in legislation related to IT. Special regulation, he said, is required in the areas of artificial intelligence, the Internet of things and the blockchain. After all, the “Digital Economy” program was approved by the government before 2024, and there are no laws that regulate it.

No sooner said than done. In the first two months of 2018, several projects appeared at once. On the morning of January 25, the Ministry of Finance published the draft law “On Digital Financial Assets”. It describes the conceptsMining”, “cryptocurrency”, “token”, “validator”, “smart contract” and so on. The purchase and sale of tokens in the amount of more than 50 rubles is allowed only between qualified investors (their description is in the law "On the securities market"), and transactions must be made in accordance with the rules of the law "On organized trading". Issuers, brokers, investors and other entrepreneurs working at the intersection of finance and IT will be in the legal field. An important thought of the document: cryptocurrency is not a means of payment.

The interest of deputies. In the evening of the same day, the draft law "On the system of distributed national mining" is published. Its author is State Duma deputy Rizvan Kurbatov, the author of several bills in the field of migration and the national question, previously unknown in the field of IT. The wording and style of presentation in his draft is very similar to that of the Ministry of Finance. This happens with students who download a term paper from the network and rewrite it in their own way. However, in essence, the projects are different: the Ministry of Finance describes the regulation of the emission and circulation of tokens by private organizations, and Kurbatov suggests that the state issue a "crypto-ruble" and use it along with a regular ruble. The State Duma Committee on the Financial Market opposed and "hacked" Kurbatov's project: the project was submitted to the State Duma, but due to the negative review of the Committee, it has so far been rejected. In any case, this curious episode shows that officials have a great interest in the topic, and they even compete in lawmaking for a while.

ICO and blockchain. But two other draft government decrees, which appeared at the turn of 2017 and 2018, are absolutely serious and extremely applied. While the state does not regulate ICO, the Ministry of Communications and Mass Media has decided to start accounting for the organizations that conduct it. 9 February, the ministry published a draft decree “On the accreditation of organizations providing the possibility of issuing digital tokens”, which assumes that ICOs will be able to conduct state-accredited organizations. The requirements for “organizations providing the opportunity to issue tokens” are simple: the accreditation system is declarative, the authorized capital is at least 100 million rubles and the obligation to redeem tokens at face value at the first presentation.

The state intends not only to regulate, but also to use the blockchain. At the end of 2017, a draft resolution “On conducting an experiment on the use of blockchain technology in Moscow” was published, and now it has passed all formal procedures and is ready for adoption by the Government. The experiment will take place in the Moscow real estate cadastre, where officials are going to register USRR data using the blockchain. For the experiment to be considered a success, 2018 thousand users must participate in it by the end of summer 100, and 80% of them must be satisfied. The Ministry of Telecom and Mass Communications and the Moscow Government will be responsible, and Vnesheconombank, Sberbank and Rostelecom will presumably be engaged in the implementation. As a result, according to officials of the Ministry of Telecom and Mass Communications, the state can create its own blockchain platform.

At the Ministry of Communications and Mass Media, the reputation of one of the most effective ministries, I believe, we will soon see a shift - some of the projects will be accepted by the government, then new ones will appear. The increase in the number of new projects says that a change in attitude towards the blockchain will come very soon. During 2018, a new technology-related market will emerge. It is still difficult to evaluate it, but it is already clear that new laws and state initiatives will outline the framework within which the whole business ecosystem will grow.

Legalize smart contracts - it means there will be a demand for lawyers who can defend them in court. Cryptocurrency will be legalized - banks will need “exchange offices”. The state will transfer part of the information services to the blockchain - IT companies will participate in the development. By the way, one of our clients, the IT giant, is seriously considering this possibility in the future and is already investing in research in the blockchain field, but so far, so to speak, writes to the table.

We look forward to seeing blockchain from a hot topic of discussion become just another working technology, like fiber or neural networks. After all, it is far from being applicable everywhere. Soon programmers will think about how best to store data - on the blockchain or on a centralized basis - based not on fashion, but on expediency. And the formation of the legislative framework just means the beginning of the decline of the "blockchain hype". This was the case, for example, with a heart transplant operation: first a miracle, over time - a service in the clinic.

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