Putin Is Said to Hold First Meeting on Cryptocurrency Rules

LAGOS (Capital Markets in Africa) – President Vladimir Putin is holding his first meeting with his top finance officials on cryptocurrencies as a debate rages on regulation of the instruments, according to four people with knowledge of the plans.

Bank of Russia Governor Elvira Nabiullina and Finance Minister Anton Siluanovare flying to Sochi to meet with the president and his economic aide, Andrey Belousov, Tuesday, the people said, asking not to be identified before the meeting. A firm decision on whether or not to ban or formally legalize the currently unregulated digital money is unlikely, two of the people said.

Enthusiasm for digital currencies in Russia has been growing and some officials have called for legalizing them, but the central bank has expressed concerns about potential risks from the anonymous and uncontrolled instruments. 

“We are totally opposed to private money, no matter if it is in physical or virtual form,” Nabiullina told reporters last week, warning that the increasingly popular mining of cryptocurrencies also bears risks. Last month, she said, “We don’t legalize pyramid schemes.”

But Siluanov said in September the government plans to regulate cryptocurrencies as securities, with a bill expected by the end of the year.

For the moment, the central bank prefers to delay a decision on the issue unless Putin pushes for action sooner, another person said last week. Since China’s ban on initial coin offerings and tightened regulation of domestic trading roiled the market, concerns have grown in Russia about the dangers of hasty moves on rules, this person said.

The central bank will work with prosecutors to block websites that allow retail investors access to bitcoin exchanges, Sergey Shvetsov, first deputy governor of the central bank, told a conference Tuesday. “We think this is a pyramid scheme, the risks are too high,” he said.

Putin met in June with Vitalik Buterin, the founder of the world’s second-largest cryptocurrency after bitcoin, and gave his blessing for Russia to develop blockchain, the technology underlying the instruments.