Europe prepares to embrace crypto, Russia gets ready to clamp down on in

• Russia and Europe raised the curtain over their cryptocurrency plans.
• The regions took a different approach to the nascent industry.

Europe has just made another step towards creating a comprehensive legal framework for the cryptocurrency and blockchain-related companies. According to an extensive 168-page draft proposal, Europe is ready to take the crypto industry out of the grey zone and define a straightforward regulatory treatment of all the digital assets that are not currently covered by the existing legislation.

Europe ready to embrace crypto

The European Commission admits that cryptocurrency assets and stablecoins are moving fast towards mass adoption; thus, regulators must find ways to incorporate them into the existing system and develop a clear set of rules. 

Namely, it is proposed to introduce special crypto-passports for the cryptocurrency-related companies. It is not clear yet, what the passport will look like; however, it is already known that crypto-projects will have to meet many requirements set out by the Сommission to access the single European market:

• capital requirements
• custody of assets
• mandatory complaint holder procedure available to investors
• rights of the investor against the issuer.

Issuers of stablecoins would have to adhere to even more stringent capital and investor protection requirements and supervision.

The European Union wants to create a unified regulatory framework to replace the separate rules introduced in individual European countries. Also, the EU will consider updating capital requirements for the cryptocurrency assets owned by the financial companies.

In addition to the unified regulations, the EU plans to develop a special “sandbox” for cryptocurrency projects, where developers will be able to experiment outside the regulatory field.

Russia tightens the grip

While Europe is taking a constructive approach, Russia is mulling over new restrictions, bans, and jail terms for the cryptocurrency industry participants. In the latest development, The Russian Ministry of Finance proposed to throw people behind bars for three years for not reporting the cryptocurrency income. 

The amended versions of cryptocurrency regulation bills prepared by the agency tighten control over the circulation of digital currencies on the Russian Federation’s territory. Thus, anyone who fails to report on the cryptocurrency wallet with the annual turnover of over 1 million rubles (about $14,000) may spend three years in prison, the local media outlet Kommersant reports.

The regulator also proposed obliging individuals to report to the tax authorities if their annual cryptocurrency proceeds exceed 100,000 rubles (about $1,400). Failure to do so will entail the fine of 50,000 rubles ($700) or the confiscation of 30% of the cryptoassets. 

In 2018 Russia introduced the sandbox for cryptocurrency and blockchain business. However, the local cryptocurrency experts criticized the initiative as it did not create a favorable environment for the fintech industry.

According to the President of the Russian Association of Cryptocurrencies and Blockchain (RACIB), the existing regulatory sandboxes “does not allow to reproduce the fintech component of our life.”

“Unfortunately, I think that this (regulator’s position) is not just sabotaging; it is the conscious policy of the central bank aimed at depriving Russia of a place in the digital economy,” he added.

As the FXStreet reported, global central banks speed up the process of creating their digital coins (CBDC) to retain control over the monetary policy and gain a competitive advantage in the global financial system.