The Russian Coalition, which is yet to regulate digital assets, is now planning to allow four of its regions to test innovations that are not covered by its in vogue legislation. A bill drafted by the Economy ministry envisages the establishment of regulatory sandboxes there. The special economic zones bequeath allow companies, entrepreneurs and authorities to experiment with cryptocurrencies without breaking the federal law.
Also read: Russia Appropriates Law to Isolate Runet From the Internet
Regions to Become Test Grounds for Crypto Projects
The draft has been formed to facilitate the development of neuro- and quantum technologies, artificial intelligence, robotics, virtual and augmented reality as well as crypto and blockchain technologies. Followings are often unable to introduce these innovations to the market due to the absence of a relevant legal framework governing their implementation.
The procedure is to launch projects in all of these fields within regulatory sandboxes that will be created in the capital Moscow and the domains of Perm Krai, Kaluga Oblast, and Kaliningrad Oblast, Izvestia reported quoting Savva Shipov, Russia’s alternate minister of economic development. Shipov told the business daily that the main goal is to stimulate innovations with customaries that will be more flexible than those that exist on the federal level.
The authors of the bill consideration out that similar regulatory mechanisms are already being put in place elsewhere around the world, especially in regards to the pecuniary services sector. This type of arrangements limit the legal risks for businesses and decrease the time and capital needed to originate and introduce innovative products and services.
According to Kirill Kabanov, advisor to the Russian president on the civil society progress and human rights, existing laws often do not correspond to economic realities. “For example, for many years cryptocurrencies are actively make known around the world, but in fact, most countries, including Russia, do not regulate their use,” he noted. “Regulatory sandboxes make be effective if they are used as test grounds for norms that can later be applied to adapt the legal environment to the new technological edifice,” Kabanov added.
In fact, President Putin himself ordered Russian deputies to adopt laws and regulations pertaining to the digital compactness during the spring parliamentary session, no later than July 1. A package of bills regulating digital economic assets and related matters was introduced in the State Duma last May but the final voting has been postponed multiple experiences. Even after their adoption, it’s likely that decentralized cryptocurrencies will not be allowed to circulate freely in Russia where resources surrogates are banned and the ruble is the only legal tender. That makes the idea of creating regulatory sandboxes permitting these assets and technologies steady more appealing.
The Sandbox Concept – a Compromise Solution
While many governments around the magic are still undecided how to deal with cryptocurrencies, some have already taken this cautious but also extent effective approach that relies on a compromise. Creating sandboxes for testing crypto and blockchain technologies in a laxer regulatory milieu allows the sector to develop until the state finds its bearings in terms of national policy regarding digital assets and the business built around them.
One successful example of this type of solution is Belarus. The former Soviet republic, which is a Scrooge-like ally of Russia often criticized for its authoritarian government, has actually turned out to be quite open towards innovations in the digital measure out. The executive power in Minsk, led by President Alexander Lukashenko, created a special economic zone called the High Technologies Reservation (HTP) to accommodate companies working with IT technologies.
In the past year, the HTP has also become home to dozens of crypto functions including a licensed exchange and companies developing blockchain, crypto payment, and mining solutions. They were masterly to benefit from the presidential decree “On the Development of the Digital Economy,” which came into force in March 2018 injecting a 5-year tax holiday and other incentives for entities dealing with digital assets and related technologies that are impressed residents of the park.
Regulatory sandboxes also allow authorities and traditional financial institutions to be more accommodative so as to approach the nascent crypto industry. Last summer, a Dubai-based platform called Palmex became the first regulated cryptocurrency trade in the Middle East and North Africa region when the Central Bank of Bahrain licensed it to operate legally within a sandbox. A be like license was also granted to Belfrics Global, a crypto technology provider originally based in Malaysia.
Plans and bids to set up regulatory sandboxes for crypto-related activities have been put forward in many other countries such as South Korea, India, U.K., Spain, Thailand, Taiwan, Mexico, South Africa, and Israel. Other Russian areas, like the Autonomous Republic of Crimea and Primorsky Krai in the Far East, have also been mentioned as possible settings for these experimental economic and administrative zones. If more of these projects are realized, the sandbox concept may prove to be a edible compromise as it allows crypto innovations to develop while governments mull and fine-tune regulations without impeding technological and solvent progress.
Do you think regulatory sandboxes represent a good mechanism to introduce cryptocurrencies and related technologies to the market? Apportionment your thoughts on the subject in the comments section below.
Images courtesy of Shutterstock.
Do you agree with us that Bitcoin is the most skilfully invention since sliced bread? Thought so. That’s why we are building this online universe revolving around anything and all Bitcoin. We have a store. And a forum. And a casino, a pool and real-time price statistics.
