The regulation of cryptocurrencies in the Russian Federation differs significantly from global practice, which causes criticism from participants in this market and requires a response from legislators. About it stated Head of the Legal Development Department of the Center for Strategic Research Foundation Maxim Bashkatov at the Finopolis forum of innovative financial technologies.
According to him, the current version of the law “On digital financial assets (DFA)” does not create favorable conditions for holding token sales in the Russian Federation and attracting Russian retail investors.
Bashkatov listed five main elements that, in his opinion, could be improved taking into account positive foreign practice.
Expansion of the list of digital rights available in the legislation
The laws “On DFA” and “On Crowdfunding” list four types of digital rights. According to the expert, conditional rights, conditional monetary claims and “unprepared” tokens should be added to them.
“At the stage of product development, it makes sense to raise funding in advance. Almost everywhere in the world they are wary of such situations, but I do not see any particular harm if such tokens with an investment element are regulated not as utilitarian rights, but as investment tokens or CFA, ”he explained.
Clarification of existing regulation
First of all, this concerns the principle of legitimation as applied to the CFA.
“Legislators have prescribed the principle of introducing CFA into GK and the fact that all transfers of rights should be reflected in the information system, but did not establish that this is the only source of knowledge about the title. Without this, the CFA turnover will not be able to rely on this public credibility, ”said Maxim Bashkatov.
He believes that this rule will protect the bona fide purchasers of CFA, regardless of the validity or invalidity of the transaction for their transfer. In turn, issuers of digital assets will not raise objections to new acquirers of assets based on relationships with old ones.
“This will be a normal stable turnover with all the developments in relation to book-entry securities.”
Regulation of CFAs issued prior to the adoption of the law and not in accordance with the law
In the Russian Federation, there is no mechanism for foreign assets to enter the Russian market, although already now many market participants want to purchase tokens for cryptocurrency.
“At the moment it is not clear whether the law“ On CFA ”is applicable to a situation when a Russian individual or legal entity issues tokens abroad, placing them in the Russian Federation,” Bashkatov said.
He proposed to endow the regulator or the operators of the circulation of the CFA with additional powers so that they could decide which foreign asset can be admitted to circulation in the Russian Federation. The same applies to domestic assets issued before the entry into force of the law “On CFA”.
Regulation of digital currency
The expert recommended that the Central Bank of the Russian Federation determine the concept of a monetary surrogate and the limits of the use of digital currencies. If the regulator intends to admit only Russian, but not foreign cryptocurrency, to circulation, it must determine the conditions for the nullity of such transactions.
“If the Central Bank believes that bitcoin is a monetary surrogate, let it at least say it directly and determine the consequences of transactions with such a cryptoasset,” the specialist said.
Expansion of the toolkit in relation to asset tokenization
Maxim Bashkatov expressed bewilderment why the current version of the law does not allow tokenization of shares in a limited liability company and why the regulator allows the tokenization of corporate rights only “at the entrance”, when creating a non-public joint stock company.
“So far, market participants cannot change the accounting procedure to another if, for example, they did not like tokenization. This is not entirely clear even from the point of view of legal policy, ”he summed up.
As a reminder, from January 1, 2021, the law “On digital financial assets” is in force in the Russian Federation. Digital rights are understood as digital rights, the issue, accounting and circulation of which are “possible only by making entries in an information system based on a distributed register.”
To issue a digital asset, it is necessary to provide information about the issuer, information about the operator of the information system, the type and amount of rights certified by assets, data on the issue and others.
The Central Bank of the Russian Federation has set a limit on the acquisition of CFA by individuals who are not qualified investors at the level of 600,000 rubles within one year.
The limit does not apply to unqualified corporate investors.
At the same time, unqualified investors cannot acquire CFA issued in foreign information systems, with the possibility of exercising rights under issue-grade securities, and also if the deadline for fulfilling obligations is not specified in the decision to issue such assets.
At the end of November 2021, the Central Bank of the Russian Federation proposed to introduce liability for the illegal circulation of CFA and establish a taxation procedure for transactions with them.
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The regulation of cryptocurrencies in the Russian Federation differs significantly from global practice, which causes criticism from participants in this market and requires a response from legislators. About it stated Head of the Legal Development Department of the Center for Strategic Research Foundation Maxim Bashkatov at the Finopolis forum of innovative financial technologies.
According to him, the current version of the law “On digital financial assets (DFA)” does not create favorable conditions for holding token sales in the Russian Federation and attracting Russian retail investors.
Bashkatov listed five main elements that, in his opinion, could be improved taking into account positive foreign practice.
Expansion of the list of digital rights available in the legislation
The laws “On DFA” and “On Crowdfunding” list four types of digital rights. According to the expert, conditional rights, conditional monetary claims and “unprepared” tokens should be added to them.
“At the stage of product development, it makes sense to raise funding in advance. Almost everywhere in the world they are wary of such situations, but I do not see any particular harm if such tokens with an investment element are regulated not as utilitarian rights, but as investment tokens or CFA, ”he explained.
Clarification of existing regulation
First of all, this concerns the principle of legitimation as applied to the CFA.
“Legislators have prescribed the principle of introducing CFA into GK and the fact that all transfers of rights should be reflected in the information system, but did not establish that this is the only source of knowledge about the title. Without this, the CFA turnover will not be able to rely on this public credibility, ”said Maxim Bashkatov.
He believes that this rule will protect the bona fide purchasers of CFA, regardless of the validity or invalidity of the transaction for their transfer. In turn, issuers of digital assets will not raise objections to new acquirers of assets based on relationships with old ones.
“This will be a normal stable turnover with all the developments in relation to book-entry securities.”
Regulation of CFAs issued prior to the adoption of the law and not in accordance with the law
In the Russian Federation, there is no mechanism for foreign assets to enter the Russian market, although already now many market participants want to purchase tokens for cryptocurrency.
“At the moment it is not clear whether the law“ On CFA ”is applicable to a situation when a Russian individual or legal entity issues tokens abroad, placing them in the Russian Federation,” Bashkatov said.
He proposed to endow the regulator or the operators of the circulation of the CFA with additional powers so that they could decide which foreign asset can be admitted to circulation in the Russian Federation. The same applies to domestic assets issued before the entry into force of the law “On CFA”.
Regulation of digital currency
The expert recommended that the Central Bank of the Russian Federation determine the concept of a monetary surrogate and the limits of the use of digital currencies. If the regulator intends to admit only Russian, but not foreign cryptocurrency, to circulation, it must determine the conditions for the nullity of such transactions.
“If the Central Bank believes that bitcoin is a monetary surrogate, let it at least say it directly and determine the consequences of transactions with such a cryptoasset,” the specialist said.
Expansion of the toolkit in relation to asset tokenization
Maxim Bashkatov expressed bewilderment why the current version of the law does not allow tokenization of shares in a limited liability company and why the regulator allows the tokenization of corporate rights only “at the entrance”, when creating a non-public joint stock company.
“So far, market participants cannot change the accounting procedure to another if, for example, they did not like tokenization. This is not entirely clear even from the point of view of legal policy, ”he summed up.
As a reminder, from January 1, 2021, the law “On digital financial assets” is in force in the Russian Federation. Digital rights are understood as digital rights, the issue, accounting and circulation of which are “possible only by making entries in an information system based on a distributed register.”
To issue a digital asset, it is necessary to provide information about the issuer, information about the operator of the information system, the type and amount of rights certified by assets, data on the issue and others.
The Central Bank of the Russian Federation has set a limit on the acquisition of CFA by individuals who are not qualified investors at the level of 600,000 rubles within one year.
The limit does not apply to unqualified corporate investors.
At the same time, unqualified investors cannot acquire CFA issued in foreign information systems, with the possibility of exercising rights under issue-grade securities, and also if the deadline for fulfilling obligations is not specified in the decision to issue such assets.
At the end of November 2021, the Central Bank of the Russian Federation proposed to introduce liability for the illegal circulation of CFA and establish a taxation procedure for transactions with them.
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