Russian PM Introduces Bill Allowing Fintech Sandboxes, Blockchain

Russian PM Introduces Bill Allowing Fintech Sandboxes, Blockchain

Government of Russia may allow regulatory sandboxes to be created for companies working on cutting-edge technologies such as artificial intelligence and distributed ledgers. Prime Minister Mikhail Mishustin introduced a new bill, which does not mention blockchain or cryptocurrencies directly but an explanatory note mentions distributed ledger as one of the technologies that could be explored in the new “experimental regulatory regimes.”

Such regimes can be established to live-test the new medicine, transportation, distant learning, financial markets, online trade, and other sectors technologies. The document says the new bill gives scope for Russia’s regulators to deal more flexibly with novel tech. It’s also suggested that regions of the country could set up their own local sandboxes.

The Bank of Russia will supervise the fintech-related sandboxes. Representatives of the Ministry of Economic Development, which initiated the bill, told the Russian Izvestia newspaper that fintech projects operating within sandboxes would be subject to lighter regulation regarding cash reserves, financial reporting and foreign currency controls.

Digital Economy Development Programme

Olga Shepeleva, a senior expert at the Center for Strategic Research, a Moscow-based think tank that helped draft the bill, said that the law should already have been passed as part of the government’s Digital Economy Development programme. There were concerns, however, that such a law would unduly skew the balance of power in favor of the executive branch.

“The main idea is that the government can choose to make a temporary exceptions from laws and regulations” for the sandboxes, Shepeleva said.

The Bank of Russia has already run a regulatory sandbox for fintech projects, and the mining and smelting company Nornickel has even reported successfully testing a blockchain-based tokenization pilot.

The sandbox of the central bank, however, only helps to model the potential uses of the new technologies, but does not allow companies to test their use cases on real clients, nor does it provide the means for expert and public control over such experiments. The new bill will allow sandboxes to be created where real businesses will be working with real customers, Shepeleva explained.

Mikhail Komin, research director at Moscow’s Center for Advanced Governance, said Russia is unlikely to become more willing to accept cryptocurrencies anytime soon, saying: “Certainly, the pandemic and the financial crisis make the government look for unorthodox solutions, but cryptography is not part of that.”

“The Bank of Russia is interested in lowering uncertainty in the financial and foreign currency markets caused by the volatility of the Russian ruble, and it believes cryptocurrencies would add even more uncertainty,” Komin said. “The Bank of Russia’s position remains the winning one in this argument.”

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