Is Russia introducing anti-crypto legislation?

Cryptocurrency is growing in popularity in Russia, but as the space continues to evolve, will the Russian government deploy anti-crypto legislation to regulate the space?

Cryptocurrencies attracted the attention of the Russian authorities in 2014. Since then, the media has periodically published frightening news about new threats of criminal responsibility for crypto investors and traders. Such news is alarming, but is there any truth in it?

It seems Russia is still not ready for the introduction of blockchain and cryptocurrencies from a legal perspective. Despite a renewed interest in the technology from Russian authorities, the problem lies in the lack of official control.

Anti-crypto legislation in Russia

The government of Russia is planning to impose new legislation around the mining of Bitcoin.

Anatoly Aksakov, the head of the financial markets committee, believes cryptocurrencies created on open blockchains are illegal tools.

Mr Aksakov announced that Russian lawmakers are considering the possibility of imposing fines on mining cryptocurrencies based on an open chain of blocks, such as Bitcoin. This was revealed in an interview with the Russian TASS news network.

Mr Aksakov said:

“I note that any operations with cryptocurrency that are contrary to Russian law will be considered illegal. This means that mining, organisation of production, circulation, and the creation of exchange points for these tools will be prohibited.

“Administrative liability in the form of a fine will be incurred for such actions. We believe that cryptocurrencies created on open chains of blocks – such as Bitcoin, Ethereum, and others – are illegal tools.”

The deputy stressed that, despite the mining ban in Russia, it is still possible to own Bitcoins if they were acquired under foreign law at foreign points of sale and exchange – but not in Russia.

Aksakov recalled that the adoption of the law “On digital financial assets” was “stuck” because of FATF (Financial Action Task Force) requirements for regulating existing cryptocurrencies. However, the law will now be passed in June before the end of the spring session.

What is the criminal liability for cryptocurrency in Russia?

According to the Constitution of the Russian Federation, it is only possible to pay for goods and services in Russia with Russian rubles. The use of cryptocurrency for purchasing goods is illegal, although the punishment for such actions has not yet been established.

Representatives of the Central Bank of Russia and the Ministry of Finance of Russia have repeatedly stated that the use of cryptocurrency to pay for goods and services is impossible.

However, Russian citizens still use cryptocurrencies, and criminal penalties for this have not yet been fixed.

There is no prohibition in the legislation regarding money substitutes other than what is contained in the law documentation of the Central Bank of the Russian Federation. In particular, the release and circulation of cryptocurrencies as such does not constitute a crime.

Therefore, while law enforcement agencies can make claims about their illegality, according to the legal interpretation of the existing rules, the courts do not yet have a definitive position.

However, the open use of cryptocurrency attracts attention and is fraught with accusations.

If you decide to buy cryptocurrency in Russia, you should be careful about your dealings and remember that payments in cryptocurrency are still deemed illegal in Russia.

Serious accusations

The authorities in Russia consider cryptocurrency a tool for money laundering and financing terrorist activities. Conducting transactions with digital assets may therefore attract the attention of law enforcement.

Cryptocurrency trading can be conducted through an exchange based in a crypto-friendly jurisdiction. However, the Central Bank of Russia still does not allow customers to openly use bank accounts for operations with cryptocurrency.

Using a bank account to store the proceeds of crypto transactions can lead to your funds being frozen. Law enforcement agencies may regard such actions as illegal banking.

Lawmakers are currently looking to establish strict rules for conducting operations with cryptocurrencies, and violators may face criminal penalties in the future.

Other things to remember

  • Tax evasion on income from transactions with cryptocurrencies may result in imprisonment of up to three years. It is necessary to enter information about such income in your tax returns.
  • Russian lawmakers are considering the possibility of imposing fines on mining cryptocurrencies based on an open chain of blocks, such as Bitcoin.
  • The Russian Ministry of the Interior is considering legislation against open source cryptocurrency, such as Bitcoin or Ethereum.
  • The rapid spread of mining has led to many people attempting to get involved. This is a matter of concern for financiers, who increasingly declare the need to regulate such activities. Some of the most demanding and tough economists want to limit this activity only for experienced and wealthy individuals.
  • The holders of cryptocurrency must provide identification in Russia. Users must obtain a special permit in order to be able to work with cryptocurrency. Violation of these rules may result in a prison term of up to 15 years.

Conclusion

The cryptocurrency market in Russia is valuable, important, and promising, but it is still extremely dangerous for those who are unprepared. It is recommended that you first get professional advice before you enter this new and developing space. This applies to both the launch of a crypto business and direct investment in digital assets.

A lot has been said about the criminal liability for performing operations with cryptocurrencies in Russia. As this is a new and constantly evolving space, you should always try and keep up to date with any new legislation or legal developments where you live. In addition, taxpayers must remember to report any income from cryptocurrency transactions.

You can read more about Russian crypto regulation and how Russia is taking aim at Bitcoin with Vladimir Putin’s CryptoRuble here on Coin Rivet:

 

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