The Russian Federation is concluding plans to allow four of its regions to test innovations that are not regulated by the current legislature, including cryptocurrencies. The Economic Ministry has drafted a bill that seeks to establish regulatory sandboxes in those regions, with companies, entrepreneurs, and authorities given a free hand to experiment with cryptos without going against federal law.
Cryptos to be tested in four regions
The bill is designed to allow companies and entrepreneurs in the country to develop neuro- and quantum technologies, AI, robotics, virtual and augmented reality, and cryptocurrencies and blockchain tech. The absence of proper regulation has made it hard for companies to test out there innovations in these fields. However, this bill will allow them to carry out such a function without breaking any laws.
The Russian government will create regulatory sandboxes in Moscow, Perm Krai, Kaluga Oblast, and Kaliningrad Oblast, and allow companies to launch projects in these regions. Savva Shipov, the country’s deputy minister of economic development, told a local media house, Izvestia, that the primary goal of this latest development is to boost innovation and regulations that would allow more flexibility the existing ones at the federal level.
According to the bill, a similar regulatory framework is being put in place in some countries across the globe, especially regarding the financial services industry. The regulatory sandboxes will limit the legal risks businesses will face and reduce the time and funds needed to develop and launch innovative products and services.
Kirill Kabanov, civil society development and human rights advisor to the Russian president believes that the existing laws most often are not in tune with economic realities. Kabanov states that while cryptocurrencies have been circulating the world over the past decade, most countries including Russia are yet to regulate their use. Thus, the regulatory sandboxes will serve as an effective way to test some innovations such as crypto and how they can be applied to the legal environment in the country at large, he added.
President Putin is reported to be at the helm of affairs, ordering his deputies to adopt laws and regulations that would cover the digital economy in the upcoming spring parliamentary session. The president expects the regulatory efforts to be in place no later than July 1.
In May last year, several bills that seek to regulate cryptocurrencies and crypto assets were introduced in the State Duma. However, the parliament has been postponing its decisions multiple times. Even after the adoption of cryptocurrencies, it is likely that decentralized cryptos would not be allowed to circulate freely in the country where alternative currencies are banned, and the Ruble is the only legal tender in the eyes of the governments. For this reason, the idea of creating regulatory sandboxes to help boost crypto assets innovations seems even more exciting.
Russia playing it safe before final adoption
While several governments across the globe are yet to decide on how best to deal with cryptocurrencies, Russia is looking to take a careful but practical approach to address this new industry.
The creation of regulatory sandboxes for testing cryptocurrencies and other innovations would allow companies and entrepreneurs to develop the technologies until Russia gets its bearing right regarding national policy and how to build an industry around them.
Several countries around the world including India, the U.K, Spain, South Korea, Thailand, Taiwan, Mexico, South Africa, and Israel are all working on plans to set up regulatory sandboxes for cryptocurrency activities.
While it may not be outright approval or regulation of the cryptocurrency sector, allowing companies to delve into this emerging market will help Russia keep up with innovations in several areas. They would also not be left behind when they are ready to adopt cryptocurrencies fully.