Russian crypto lawyers urge Putin to stop regulatory hostility

As Russia continues to delay approval of cryptocurrency regulations, local lawyers have appealed to Russian President Vladimir Putin to change the government’s approach to regulating the market.

The Russian Association of Crypto Industry and Blockchain (RACIB), a large group of crypto and blockchain enthusiasts in Russia, sent an open letter to Putin on March 6, urging the president to consider the risks of ignoring the global development of the crypto industry.

In the letter, the RACIB argued that Russia has been too slow to implement experimental legal regimes aimed at crypto adoption, despite enforcing its first crypto law, “On Digital Financial Assets,” in 2021.

In November 2022, lawmakers in Russia introduced a series of legislative changes to the crypto law, proposing to launch a “national cryptocurrency exchange”. According to the RACIB, some of those changes would significantly complicate the implementation of digital financial technologies in Russia as they introduce criminal penalties for local blockchain developers.

The proposed changes would give Russian enforcement authorities a “sea of ​​choice” to put pressure on the local crypto community, RACIB executive director Alexander Brazhnikov told Cointelegraph.

“It will not be easy for companies in the digital asset industry to prove that they are doing everything within the framework of Russian law,” said Brazhnikov.

The RACIB eventually called on Putin to end Russia’s hostile regulatory stance on crypto, as it deters local businesses from fully exploiting crypto’s potential and could potentially lead the country to “direct financial losses.” The RACIB stated:

“Existing state policies around the regulation of digital financial assets create serious risks for the Russian economy to lag behind not only unfriendly, but also friendly countries due to the slowdown in the introduction of new financial technologies.”

According to the RACIB, one of the biggest risks behind ignoring the benefits of the crypto industry is the displacement of local talent into advanced jurisdictions, including the Eurasian Economic Union (EAEU) countries such as Kazakhstan and Armenia.

To help Russia change its strict regulatory stance on crypto, the RACIB has asked Putin to create a working group with representatives of the digital asset community to work with the government on developing the state’s crypto regulatory policies. The group has specifically expressed interest in developing and deploying cross-border payment systems in Russia, EAEU jurisdictions and other countries such as Brazil, India, China and South Africa.

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In 2021, RACIB’s Yury Pripachkin argued that Russia was doing “absolutely nothing” to regulate the local cryptocurrency market.

The news comes shortly after Russia’s central bank reiterated its uncompromising stance on crypto, with Elizaveta Danilova, head of the Bank of Russia’s financial stability department, arguing that legalization of crypto investments threatens the well-being of Russian citizens. At the same time, the Bank of Russia sees no problem in legalizing crypto mining and allowing crypto use in cross-border transactions.