Russia’s Ministry for Economy: Regulate, don’t ban digital currencies

A Russian ministry is standing up for the digital currency industry against a proposed blanket ban that could see harsh penalties on digital currency users. The Ministry for Economic Development believes that banning will only lead to the rise of an uncontrolled black market.

Earlier this month, the State Duma made public a new draft law on digital assets. If approved, it could have significant effect on Russia’s digital currency industry. The draft law recommends jail terms and hefty fines for digital currency users and trading platform operators.

Even if the new bill passes, it will do little in stopping the use of digital currencies in Russia, the ministry believes. In a letter sent to the State Duma, it stated that the users will still access the digital currencies on platforms that the Russian government has no jurisdiction over. This will render the government’s protective measures null and void.

The head of the State Duma’s financial markets committee, Anatoly Aksakov holds the same view. Earlier on, Aksakov stated that Russian digital currency enthusiasts can still use VPNs and other means to bypass restrictions and access global platforms. The result will be the creation of an uncontrolled Bitcoin black market.

In its letter, the ministry urges the State Duma to instead focus on creating a controllable digital currency market in Russia. This will allow the government to protect the investors, but not at the expense of financial innovation.

The letter, which was seen by local outlet Kommersant, advocates for the government to establish guidelines for both the users and the issuers. It proposes that the Bank of Russia should be charged with overseeing the industry and enforcing regulations.

The ministry’s views have received support from various sectors in Russia which also believe that a blanket ban isn’t the right step for the country. Dmitry Zakharov, the Director General of the Moscow Digital School told the outlet that a ban would also see Russia miss out on great opportunities. They include loss of taxes from digital currency trading and mining activities. Russia would also lose many innovators in the industry, he told the outlet.