Is crypto legal in Russia?
Each state today regulates the crypto industry based on its own interests and in completely different ways. Some countries fully prohibit cryptocurrencies, while others have made steps to legalize them.
There are already rules and regulations governing the circulation of cryptocurrencies in the Russian market. But as is the case with many other countries, there are problems with regulating cryptocurrencies since the industry is very young and not all the regulators are familiar with it.
Like many countries, Russia followed the global trends, and in 2014, there were early signs of various proposals for bills to regulate the industry. The first distinct steps toward regulation began in 2018, and in 2019, the federal law “On Digital Rights” came into force, which provided the procedure and rules for using digital assets and tokens. A full-fledged law “On Digital Financial Assets” also began to be discussed. Finally, in January 2021, the still very “crude” and unfinished piece of legislation came into effect. This was the first law that aimed to specifically regulate cryptocurrencies and mining, as well as introduce taxation, but it still didn’t recognize cryptocurrencies as a means of payment. Russian banks and stock exchanges are able to conduct transactions of purchase, sale and exchange of assets if they are included in a special register of the central bank.
Nevertheless, the state doesn’t have a mechanism to track profits derived from cryptocurrencies. When applying this law to ordinary users, a person who wants to store Bitcoin and doesn’t tell anyone about it, they can safely do it thanks to the network’s anonymity. Deanonymization occurs when cryptocurrencies get exchanged for rubles, dollars or any other fiat currencies, making it possible for the state to intervene in these transactions and create obstacles.
In general, regulators in Russia cannot find a consensus, not only regarding the adoption of cryptocurrencies but how to even label and subsequently regulate them. Recently, the Russian Ministry of Economic Development proposed to understand mining as a business activity in accordance with the civil code. The proposal was supported by the Ministry of Finance, the Ministry of Energy and the lower house, the State Duma.
The Ministry of Energy specified that consumers must indicate the level of power consumption for business or for personal spending. The State Duma also proposed to increase the electricity tariff for miners since they do not pay any taxes. But the Central Bank of Russia did not support this initiative and called mining a “monetary surrogate.” In September, the Central Bank suggested banks slow down payments of Russian users in crypto exchanges to combat “emotional purchases” of cryptocurrencies.
For Valeriy Petrov, vice president of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain, this suggests that the Central Bank is stalling to make a decisive regulatory move despite the desire from the local industry to work with the regulators:
“Regulation of mining is required only in two issues: recognition of its entrepreneurial activity and the legalization of the sale of earned crypto assets outside the Russian Federation in order to organize an inflow of foreign exchange funds into the country and determine the procedure for paying taxes to the state treasury. The crypto community has developed all the questions for a long time.”
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