In Russia, a dispute over cryptocurrency regulation
heated up when the finance ministry submitted legislative proposals
that clashed with the central bank’s demand for a blanket ban.

The Bank of Russia has suggested a complete ban on
cryptocurrency trading and mining citing the threat digital currencies pose to
financial stability. On the other hand, the finance ministry disagrees and
President Vladimir Putin has also called on authorities to find a consensus,
as reported by Reuters.

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On Friday, speaking to state TV channel Rossiya-24,
Finance Minister Anton Siluanov said that he hoped disagreements could be
ironed out and a bill regulating cryptocurrencies passed by the end of the
year. The government would take the final decision, he added.

According to Reuters reported, although he acknowledged
broader debates may delay its passage, Siluanov hoped that it would pass in the
spring session under the best-case scenario. He said his ministry proposed
identifying crypto traders so that the “white” market could be
distinguished from the “grey.”

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Providing law enforcement with the power to track money
flows and transactions may diminish their anonymity, which is one of the major
selling points of cryptocurrencies.

David Henderson, senior associate at Browne Jacobson said
“The Russian government…appears to have taken the position that
crypto-assets are here to stay and is contemplating legislation with the aim of
bringing the industry ‘out of the shadows’ and creating an opportunity for
legal business”.

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However, the Russian central bank seeks an outright ban
on the issuance and circulation of cryptocurrencies and disagrees with the
ministry’s proposals, reported Reuters.

The finance ministry and central bank did not immediately
reply to Reuters requests for comment.

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Their opposed opinions could significantly hinder market
development, giving time for the grey market to become even greyer said Andrey
Kladov, the former cryptocurrency expert at Russia’s Internet Initiatives
Development Fund. He is now engaged in digital banking in South Africa.

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Kladov told Reuters that “A prohibitionist stance on
it is absolutely useless, like banning umbrellas because 50 years ago someone
killed a man with an umbrella”. Everyone has umbrellas and every fifth or
10th person has cryptocurrency, he added.

According to the central bank, the annual volume of
cryptocurrency transactions in Russia is around $5 billion.

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Despite the dispute,
Siluanov says his ministry is working with the central bank to ensure crypto
assets aren’t included on banks’ balance sheets.