Under the proposals, cryptocurrencies should be defined and regulated as blockchain products.

Russia is slowly moving towards developing its regulation for cryptocurrencies and related tech. On Friday, Russia’s Presidential Commissioner for Entrepreneurs’ Rights Boris Titov presented a set of cryptocurrency regulation proposals drafted by experts from the P.A. Stolypin institute.

Mr Titov, quoted by Russian information agency TASS, explained that, under the proposals, cryptocurrencies are defined as payment means having monetary value, which are not nominated in any official government currency. Such payment means are created and transmitted via blockchain and are used for transactions by an unlimited number of parties. E-money is not considered cryptocurrencies. Neither are tokens issued within initial coin offerings (ICOs).

The first steps in the regulation involve the definition of cryptotokens and blockchain technology. This should be followed by determination of the cryptocurrencies that may be exchanged in Russia, as well as defining the rules for the exchange of such cryptocurrencies for Russian rubles and other currencies. The remaining issues should be solved thanks to a regulatory sandbox.

The authors of the proposals note that the focus should be on the protection of investors rather than the pursuit of some fiscal interest and the imposition of taxes.

Mr Titov suggests that the first cryptocurrencies to be allowed to be exchanged in Russia should be the ones with an operator or a “center of emission” based on blockchain. “We propose to regulate cryptocurrencies as products of blockchain”, he said. Given that Bitcoin is decentralized, it will not be a part of this first group of cryptocurrencies.

The question about allowing certain cryptocurrencies to be exchanged for Russian rubles may be answered only by Russia’s central bank, the authors of the proposals note. According to them, the banks and payment services providers should be authorized to provide cryptocurrency exchange services. Later, certified cryptocurrency exchanges may join in.

The proposals have been sent to the Russian Finance Ministry, the Duma and the Central Bank.

The presentation of the cryptocurrency regulation proposals happens less than a fortnight after Russia’s President Vladimir Putin issued orders to the Central Bank of Russia and the Russian government, giving them until July 1, 2018, to change Russian legislation so that it determines the status of DLT, cryptocurrencies, smart-contracts and tokens.

The Bank of Russia has recently reiterated its warning concerning ICOs and cryptocurrencies. The regulator, however, is welcoming novel fintech solutions and blockchain.