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article imagePutin orders regulation of cryptocurrencies and blockchain

By Ken Hanly     Oct 25, 2017 in Technology
Moscow - Russian president Vladimir Putin has just released five presidential orders that all relate to regulation of both cryptocurrencies and the the associated blockchain technology.
Putin's actions come just two weeks are after a high-ranking Russian bank authority had hinted that cryptocurrency exchanges would be banned. According to a CNBC report, Sergei Shvetsov, the first deputy director of Russia's central bank said at a conference that the government would block cryptocurrency exchanges. Instead Putin has released wide-ranging orders dealing with a number of aspects of cryptocurrencies and blockchain technology.
Putin has asked the Russian government to determine how cryptocurrencies such as bitcoin, and technology such as that involved in smart contracts, as well as initial coin offerings (ICOs) fit into the broader Russian financial regulatory framework. The government is to report back by next July.
Putin also asks that a framework for registering cryptocurrency miners. Since the miners are earning from the mining, Putin wants to tax those earnings.
Putin has tasked the Russian PM Dmitry Medvedev, and Elvira Nabiullina the head of the central bank with determining how to regulate token sales during ICOs in the same way as securities are regulated during initial public share offerings.
Putin is also calling for "sandbox regulations" of the type already used in the UK, so that blockchain developers can demonstrate new technologies or applications to the Central Bank of Russia in order that they be regulated. The UK regulation allows businesses to test innovative products, services and business models as well as delivery mechanisms in the market with actual consumers. Putin asked for a report on this by the end of the year.
Putin's final order demands that by next March "formation of a single payment space for the member states of the Eurasian Economic Union with the use of new financial technologies, including the technology of distributed registries". Russia is already said to be planning its own cryptocurrency, the CryptoRuble and Kazakhstan too has just announced it plans to create its own cryptocurrency.
There will be no miners in the CryptoRuble system. There will be a 13 percent tax on transactions using the coin. The breakaway province of Georgia, Abkhazia is also planning its own cryptocurrency that it hopes will eventually become legal tender. Abkhazia will not tax transactions using the coin.
In June, Putin is said to have told Vitalik Buterin creator of Ethereum that he supported the idea of establishing ties with possible Russian partners. In September the Russian finance minister said that it was pointless to prohibit cryptocurrencies but vowed to create a regulatory framework by the end of this year.
The Putin orders clarify the situation after several authorities suggested a more negative reception of the currencies including banning bitcoin as a payment option in Russia. Putin's announcement follows upon a wave of regulatory crackdowns in the cryptosphere. Russia already has its own WhopperCoin released by Burger King in Russia.
More about Vladiimir Putin, bitcoin, blockchain technology
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