Are bitcoins banned in Russia? Cryptocurrency Mining: How Legal Is It? Bitcoin is banned… What will happen to the rate of Bitcoin and other cryptocurrencies if they are banned in Russia? How to spend bitcoins in Russia
The development of the digital money segment in the world causes a different reaction from the governments of various countries. Some pass bills that legalize cryptocurrency, others simply take a pending position, trying to predict the development of the market in the future. But there are also those countries where bitcoin is banned.
As a rule, these are not highly developed countries. However, there are exceptions among them: some world powers do not support the use of bitcoin on their territory.
Why are governments opposing cryptocurrencies? There are reasons. The use of bitcoin and other cryptocurrencies allows many people to work with funds without the mediation of banks. This allows you to hide your earnings, thereby avoiding taxation. Fraudsters and criminals can easily buy prohibited goods online. In general, the development of cryptocurrencies helps to reduce the control of the economic situation by the ruling elite.
Therefore, it is banned in some areas. Now let's take a closer look at the situation.
Bitcoin law in Russia 2018: what to expect?
The Russian Federation has so far taken a neutral position regarding bitcoins and other cryptocurrencies. Although earlier on the part of officials there were attempts to equate the use of crypto money with the laundering of illegal income.
Now the country's government is already developing some bills that will have to somehow regulate the use of digital money. Vladimir Putin instructed the Central Bank to develop relevant bills by July 1, 2018.
The new documents will define the basic concepts related to the cryptocurrency market. Also, when developing them, the principle of the mandatory use of the national currency of Russia - the ruble - will be taken into account. This is the only national fiat that can be used to pay on the territory of the state.
In general, such attention from the government to crypto money can be regarded as positive. The law on cryptocurrency in the Russian Federation will legalize the use of digital currencies. And such documents will only help to introduce new technologies into the country's economy.
True, no one denies that the new laws may aggravate the situation: an unlikely assumption, which, however, also takes place.
In which countries is bitcoin outlawed?
Now let's examine the countries where bitcoin trading is prohibited. Some of them did not introduce a complete ban on trading, but they severely limited the actions of users.
Bangladesh
The government of this country banned the use of Bitcoin in 2014. Any involvement in digital money transactions is equated to illegal circulation of funds. And punishable by prison: a resident of this country can get up to 12 years in prison for involvement in trade.
Money laundering is the main reason why Bitcoin is banned in Bangladesh. The head of the Central Bank of the country said three years ago:
Bitcoin cannot be used as a legal currency in any state. Any transfer of money into cryptocurrencies should be declared illegal.
By the way, the laws banning bitcoin are based on acts adopted back in 1947.
Bolivia
As in the case of Bangladesh, Bolivia banned all digital currency transactions in 2014.
As for this country, the government is completely skeptical of any means of payment that cannot be regulated by law. The central bank of the state in its address stated:
Any funds that are not controlled by the government should be outlawed.
The country's leadership, by the way, constantly reminds residents of the ban in various appeals.
Ecuador
The Ecuadorian government has proven to be more advanced than the predecessors on our list. After banning bitcoin in 2014, they introduced a new cryptocurrency law that allows the use of only digital money - created by the government itself.
True, most of the advantages of such coins disappear: there is neither anonymity nor independence from the state. In fact, this is another national currency that is pegged to the dollar.
However, Ecuadorians continue to use bitcoins and other crypto money: if they are caught doing this, they simply confiscate all funds. Bitcoin is outlawed, but the punishment is not too severe to discourage traders from trading.
Kyrgyzstan
This is the first country in the post-Soviet space that has introduced such bans. In Kyrgyzstan, in 2014, laws were passed that declared the use of digital money illegal.
The documents indicate that the only acceptable means of payment in the country is the Kyrgyz som.
But judging by the situation today, the bitcoin ban in this country is not so tough: they say that the government is already developing its own cryptocurrency and plans to soften the legislation in favor of crypto money.
Vietnam
In the same 2014, cryptocurrency was banned in Vietnam. Why is bitcoin banned there? The reasons are the same: illegal circulation of funds. But in the country, despite the ban, crypto money is used to the fullest. The penalties for this case are so meager that even Vietnamese schoolchildren are not afraid to take risks.
In addition, the country's leadership plans to make digital money trading legal for financial institutions.
China
China cannot be called a country that has fully introduced massive bans on crypto trading. But the ban on bitcoin in China is still partially introduced: new ICO projects cannot be launched, banks are prohibited from carrying out transactions using cryptocurrency.
However, traders can continue trading and even mine new coins without any problems. In general, the Chinese market is one of the largest in the world. If the government completely bans the use of coins on its territory, this will invariably affect the entire global market. That is why traders are closely monitoring the situation in this country.
Even a partial ban on bitcoin in China has had a negative impact on the bitcoin price in the past. The government was worried that the country's national currency would lose its value if more people continued to invest in cryptocoins. And they introduced a number of restrictions.
Now the situation seems to have stabilized. And hopefully the Chinese will be allowed to feel freer in the future.
Will bitcoin be banned in the world: conclusion
Well, as you can see, the list of countries is mostly not the most developed countries. With the possible exception of China. But this country cannot be called free.
Trends indicate that developed countries such as Sweden, the USA, Germany, Australia and many others are only developing the cryptocurrency sphere.
Other countries listed in this article, on the contrary, slow down the development of the segment. By the way, Iceland was recently included in this list. But in 2017, the government fully restored the rights of traders, repealing all restrictive laws.
There are many legends about cryptocurrency and the legality of its use in the Russian Federation. Some claim that Bitcoin is banned in Russia, and the legislative consolidation of this status is only a matter of time. Others say that the cryptocurrency has a great future, and the new law of 2018 will provide it with a stable position in society. Below we will consider how the history of regulation of virtual money in Russia has developed, what awaits them in the future, and what are the subtleties of the new bill, which is being prepared for consideration in the near future.
Banning Bitcoin - The History of Cryptocurrency from a Regulatory Position
Despite the creation of Bitcoin back in 2009, the first statements about the use of cryptocurrency in the Russian Federation appeared five years later - in January 2014. Since that time, many events have taken place regarding the issue of virtual money. What awaits them - legalization or a complete ban? Let's take a brief look at the history of the "confrontation" between government regulators and cryptocurrencies over the years.
year 2014
At the end of January, the Central Bank of the Russian Federation officially warned users of digital currency (in particular, Bitcoin) against their use. The regulator’s argument was the anonymity of the cryptocurrency, which is why it was often used to conduct dubious transactions. At the same time, a reference appeared in the Federal Law on the prohibition of money surrogates in the Russian Federation. At the same time, the statement of the Central Bank looked like a recommendation, not an instruction, so few users took it seriously.
Already in February 2014, statements by the Prosecutor General's Office of the Russian Federation appeared based on the results of a meeting of the country's major law enforcement agencies (including the Ministry of Internal Affairs and the FSB). As in the case discussed above, the speech concerned the risks of using virtual money, and the information was presented from the position of a recommendation. At the same time, an anonymous source said that an article on money laundering (according to p. 174 of the Criminal Code of the Russian Federation) may be applied to the violator for the use of cryptocurrency. But, despite such harsh statements, there was no talk of a complete ban on Bitcoin.
At the end of February, the leadership of the State Drug Control Service spoke on the topic of virtual currency. The statement noted that Bitcoin is more often than other funds used to trade illegal goods.
As a result, in October, the first plans were announced to introduce penalties for the use of cryptocurrency in general and Bitcoin in particular:
- For legal entities - from 0.5 to 1 million rubles.
- For individuals and citizens in office - from 50 to 100 thousand rubles.
In December, an analysis of the considered proposal was carried out, after which it was abandoned. The reason is that not only Bitcoins could be banned, but also a number of marketing programs, because of which large enterprises and banks could suffer. The final document was amended, but the mentioned norms and prohibitions remained unchanged. The updated version of the bill was approved and approved by the Ministry of Economic Development of the Russian Federation.
2015
In 2015, discussions about a possible ban on Bitcoin in Russia continued, but no decisive measures were taken. Roskomnadzor set to work, which on January 13 blocked and added to the list of prohibited resources a number of sites - Bitcoin.it, Bitcoin.org and other sites related to Bitcoin. The basis for these actions was the decision of the City Court of the Sverdlovsk region, issued at the end of September 2014.
A resonant event in the cryptocurrency world was the addition of the resource “Zuckerberg will call” to the Unified Register for the material about the Bitcoin cryptocurrency, released two years earlier. The Astrakhan court considered that the text of the material contained propaganda that inclines readers to tax crimes.
In June, there were speculations that the Central Bank of the Russian Federation plans to consolidate the legality of Bitcoin in Russia and even allow its use, but such assumptions remained rumors. No further steps were taken in this direction.
2016
In January 2016, the head of the Investigative Committee of the Russian Federation, A. Bastrykin, announced plans to introduce criminal liability for the use of Bitcoin. Already in the spring, the Ministry of Finance of the Russian Federation proposed a tougher punishment for the extraction of virtual coins:
- For individuals - up to 4 years in prison.
- For heads of enterprises - up to 7 years in prison and a fine of 1 to 2.5 million rubles, as well as a ban on holding certain positions for up to 3 years.
In the summer of 2016, a lot of work was done to block news and other sites about Bitcoin. The basis was the decision taken by the Vyborgsky District Court. The site owner tried to challenge the decision already in 2017, but to no avail. The court did not even consider the case on its merits, because it considered that the decision made in no way violates the rights of the owner.
At the end of 2016, the head of one of the departments of the Central Bank of the Russian Federation noted that it was important to be flexible in the issue of cryptocurrency. If you ban virtual money within the country, they will go beyond its borders. As a result, the level of security of the financial system will not increase, as many assume, but will decrease.
2017
A lot of events around the cryptocurrency and its ban unfolded in 2017. Already on January 19, the EXMO resource (an exchange platform for trading various cryptocurrencies) was blocked. The basis was the decision of one of the judicial authorities of St. Petersburg, issued back in August last (2016) year.
In April, a number of forums were held regarding blockchain technology and cryptocurrency. At one of them, V. Kalukhov said that Bitcoin is not prohibited, and such actions are not yet planned. Moreover, it was reported that the legalization of virtual coins is expected in 2018.
Already in May, information appeared from insiders that Russian banks and the Russian Ministry of Finance were discussing the creation of internal cryptosystems. Already in June, the first projects were developed aimed at obtaining their own cryptocurrency based on blockchain technology. Despite the activity of the dialogue, the experts acknowledged that the solution of this issue will take from 2-3 years, no less.
Before that, there was news about the desire of the Ministry of Finance to make cryptocurrency a legal means of payment, giving Bitcoin the status of digital money (to control issuance). It was planned to submit draft amendments to this issue to the Duma for consideration by the end of 2017, but in reality this happened only in 2018 (more on that below).
At the end of May, Deputy Chairman of the Central Bank of the Russian Federation O. Skorobogatova, speaking before the State Duma, proposed to introduce a tax on the use of virtual money and give them the status of "digital", as noted above. The deputy chairman proposed to control cryptocurrencies, which caused a number of discussions in various ministries (finance, economic development, and others).
At the end of August, the adviser to the head of the country informed the public about the desire to create a Russian version of the association of blockchain and virtual coins. According to the plan, the goal of such an organization will be the introduction of blockchain technology, work with regulators and the implementation of comprehensive measures to legalize virtual money. It is planned to create three committees, each of which will solve specific problems - for the extraction of cryptocurrency, for ICO, as well as for blockchain.
At the same time, statements were made in the Ministry of Finance of the Russian Federation to ban the sale of Bitcoin to individuals. The representative of the ministry noted that in the future it is planned to equate virtual coins to financial assets with subsequent sale on the Moscow Exchange. Rosfinmonitoring will act as the controlling body.
According to an employee of the Ministry of Finance, trading using virtual money will be available only to experienced investors. Like other issues, this nuance is planned to be considered with the participation of representatives of the Moscow Exchange and the Central Bank of the Russian Federation. The ultimate goal is to make the asset available, but only on the mentioned exchange platform, closing access to it from private individuals. According to employees of the Ministry of Finance, this approach will minimize the number of illegal in the network.
Another thought about the legalization of Bitcoin was voiced at a meeting of the President of the Russian Federation with entrepreneurs. At the same time, the head of the Central Bank of the Russian Federation, E. Nabiullina, in her comment noted that she does not accept innovations and considers such actions to be ineffective.
At the end of September, M. Kaiser (a well-known expert in the field of finance) noted that in the future Russia could become a leader in financial matters. According to him, sources in the highest echelons of power have indicated a desire to allow Bitcoin to the market and make it a legal currency. In turn, A. Kudrin (former head of the Ministry of Finance of the Russian Federation) noted the effectiveness of such a step as the legalization of blockchain.
The idea of regulating virtual money was once again voiced in October - at a meeting with Putin V.V. The President of the Russian Federation noted that in the issue of legalizing Bitcoin, it is important not to build additional restrictions, but to create optimal conditions for the development of the country's virtual financial system in order to protect the interests of the country and its citizens.
In the second half of October, I. Shuvalov (Deputy Prime Minister of Russia) noted that the promotion of ICO is an excellent chance for businessmen to find funds for the implementation of business plans. He noted that in this matter it is important not to limit the cryptocurrency network, but, on the contrary, to create optimal conditions for its operation in the country.
Subsequently, information appeared on the Web about the desire to create patent taxation in relation to the mining of virtual money. This is due to the fact that the mining of Bitcoin and other cryptocurrencies is a commercial activity, so paying taxes is a prerequisite.
In the fall of 2017, a wave of reports swept through about the government’s desire to ban the equipping of farms for the production of virtual currency at home. The problem was considered at a meeting of the working group dealing with global network issues under the President of the Russian Federation. The reason for the dissatisfaction was the high energy consumption of mining farms, which creates risks for other citizens living in high-rise buildings.
On the other hand, there were opinions that the extraction of virtual coins should be encouraged, but it is important to establish business in regions where there is a cold climate and there is no shortage of electricity. The best option is the Irkutsk region, where the cost of 1 kWh is about 1 ruble.
Will Bitcoin be banned in 2018?
Discussions about cryptocurrencies flared up with renewed vigor after the news about the appearance of a bill on virtual money in the State Duma of the Russian Federation. Many were wondering what to expect from the deputies - whether Bitcoin would be banned or a regulatory system would be introduced.
The essence of the bill
Based on the terms of the new law, cryptocurrency will be available to citizens of the Russian Federation on special exchange platforms, but it is still prohibited to use it to pay for goods in the country. Innovations also apply to miners, who will have to register as an individual entrepreneur and pay taxes, like other entrepreneurs.
In addition, the bill introduces definitions of virtual money - cryptocurrencies and tokens. The document notes that the mentioned coins belong to the category of property that has an electronic form. The difference between the terms is only in the extraction option and the essence of money. By definition, cryptocurrency is built on technology (personal base). As for tokens, they use the platform on which they are developed as the basis.
The bill notes that virtual money (regardless of type) cannot be used for payment. The ban is valid on the territory of the Russian Federation. This is due to the fact that the only means of payment in the country (by law) is the ruble. At the same time, the Central Bank of the Russian Federation does not plan to change the rules for cryptocurrency.
But this is not the only reason why virtual money cannot be used as a payment instrument. The authorities are afraid of losing control over the finances of the Russians and the production of money. Generally speaking, according to the new bill, Bitcoin and other digital coins are equated with financial assets, and transactions with such money can only be carried out through officially registered legal entities - with a dealer or broker license, as well as through trade organizers.
There are no restrictions on the purchase of cryptocurrency in the bill yet. In the previous version, it was mentioned that investors without legal status within the same issue have the right to buy virtual coins in the amount of no more than 50,000 rubles. (in equivalent). At the same time, the Central Bank of the Russian Federation allowed investors to spend no more than 0.5 million a year.
Special attention is paid to miners, who, upon the entry into force of the bill, will be able to work only officially - by creating an individual entrepreneur or legal entity. You can’t just buy farms for mining coins and mine coins at home without registration. The search for violators is planned to be carried out by exceeding the tariff for electrical energy within a 3-month term. The association RAKIB criticized the bill. Its representatives claim that this approach will lead to a decrease in the number of miners in the country and slow down the development of the cryptocurrency industry. The association noted that today it is important to create common rules for regulating virtual money together with countries from the CU.
By the way, in Belarus the cryptocurrency is legal and it can be mined, sold and bought without paying taxes to the country. In addition, the government is allowed to change virtual money into the national currency and other fiat currencies. Apart from Belarus, the only country that has recognized virtual money is Japan.
National Bitcoin Exchange
In April 2018, there were rumors about the creation of an official BITEX exchange platform by the end of the year. According to the first information, only three virtual coins will be traded on the exchange - cryptoruble, Ethereum and Bitcoin. The role of the operator will be assumed by a large banking institution, which has not yet been determined. It is planned that this will be a financial institution associated with NSD or the Moscow Exchange. The main "stumbling block" is the lack of clear laws in the field of cryptocurrencies. Interestingly, the BITEX exchange is already operating in Argentina.
No sooner had the news appeared on the Web than denials had already begun. So, E. Sidorenko (head of the group for risk assessment in the field of circulation of virtual coins) noted that such statements are untrue. The reason is that three components are required to open an exchange:
- The consent of the authorities to change the cryptocurrency to fiat money.
- Adoption of FATF AML rules.
- The willingness of banks to take the hit and put up with increased volatility.
Should we expect a ban on Bitcoin in Russia?
In view of the foregoing, we can conclude that the Government of the Russian Federation and the deputies are determined to regulate the cryptocurrency market, and not introduce strict bans. However, according to experts, the new bill requires a number of improvements. Experts assure that the main problem will be the collection of taxes from miners due to the difficulty of identifying them and the high volatility of the cryptocurrency.
Generally speaking, the legalization of virtual money can be an impetus for financial assistance. This niche can include banking institutions, investment companies and private investors. It remains to be seen what the fate of the new bill will be.
More about the ban on cryptocurrencies in Russia - the opinion of Denis Borisov:
Greetings to my dear readers! In the office building where I work, I spotted one very interesting office. Even though it's pretty chilly outside, they always have fans running.
And the other day, I finally realized what they are doing - mining bitcoins! There are a lot of video cards, a lot of heat, but I still won’t ask if there is a lot of revenue from this business. When I find out, I will definitely share. In the meantime, I propose to talk in general terms: is bitcoin allowed in Russia in principle, for example. Read more in my article!
Is bitcoin allowed in Russia
Against the backdrop of the growing popularity of cryptocurrency, rumors are spreading that bitcoins will be banned in Russia. They have a certain foundation. The state cannot put up with a monetary system that is not controlled by the government and law enforcement agencies.
Back in 2014, the Prosecutor General's Office and the Central Bank made statements about the need to control and regulate the cryptocurrency market. However, so far the "law and bitcoins" has not been adopted.
At the same time, the actions and statements of the government and legislators are very contradictory. On the one hand, there was a bill to ban bitcoins in Russia.
On the other hand, the Deputy Minister of Finance spoke about the possible legislative consolidation of bitcoin as a means of payment. So far, only Russian courts have periodically blocked websites related to bitcoin, as well as cryptocurrency exchanges.
Sometimes resource owners managed to remove these prohibitions through higher courts, which in no way cancels the general trend: the state is struggling with an independent monetary instrument.
Is the circulation of bitcoins prohibited?
The owners of crypto coins, as well as those who are just about to start a wallet for settlements or making money online, do not need to worry yet.
The ban on bitcoins in Russia has not been introduced. It is possible to use bitcoins in Russia, their legality at this stage is rather uncertain.
A warning!
To legitimize cryptocurrency as a monetary unit, the Constitution will have to be changed. According to Article 75, the only monetary unit in Russia is the ruble.
Other monetary units are simply not provided. The Central Bank is obliged to do everything possible to strengthen the reliability and stability of the national currency.
From this point of view, the legalization of bitcoin in Russia is impossible, as it will create competition, which will necessarily affect the stability of the ruble.
However, it is impossible to say that bitcoins will be banned in the near future. The complexity of the fight against Bitcoin is also explained by the fact that the currency is circulated exclusively on the Internet and has no material signs. Anyone can open a wallet and mine cryptocurrencies or simply pay with cryptocurrencies for purchases on the Internet.
Tracking these actions is almost impossible. Information about all transactions contained in the blockchain, although open to everyone, does not contain the binding of wallets to specific owners.
Attention!
It is quite possible that cryptocurrencies are still legal in the Russian Federation precisely because of the lack of an effective way to stop their circulation in the network. Therefore, the situation is as follows: the legislation does not contain direct prohibitions on the issuance and circulation of virtual currencies.
However, they are not recognized as a means of payment either. Therefore, transactions using Bitcoin and other virtual coins cannot be considered legal and, in case of disputes, the interests of the parties cannot be defended in court.
In other words, the legal status of bitcoin is not defined. Against this background, the state does not abandon attempts to control or, if it fails to control, completely ban cryptocurrencies.
Moreover, at the moment they are really not always used for good legitimate purposes.
The history of the fight against bitcoins in Russia
Doubts about whether bitcoins are legal in the Russian Federation or not did not arise from scratch. This is facilitated by the ongoing history of the struggle of officials with virtual money. So, in order...
Advice!
The first mention of a ban on bitcoin was made by officials of the Central Bank and the Prosecutor General's Office this year. Then they were more of a recommendation. They advised against the use of cryptocurrencies and talked about upcoming bills in Russia prohibiting the circulation of cryptocurrencies.
The fact that bitcoin is a surrogate, which is not safe to use, was emphasized. However, until the law prohibiting bitcoin is created, users can work with it at their own peril and risk.
In the same year, the Ministry of Finance proposed to introduce into Russian legislation the rules governing the circulation of cryptocurrencies. The authors of the project insisted that digital currencies are not backed by anything and have an unstable exchange rate. However, these same words can describe the currency of any state.
Indeed, since the “gold standard” was abandoned, none of the monetary units has a real content. If we talk about the laundering of illegal income, then we should rather pay attention to offshore companies.
At the end of 2014, the Ministry of Economic Development blocked the bill of the Ministry of Finance of the Russian Federation, pointing out that it could not be adopted in the proposed form.
The attack on cryptocurrencies was launched from the other side. Nobody tried to ban them as a means of payment. Instead, the provincial courts began to decide on the blocking of sites specializing in mining and operations with bitcoins.
Despite the fact that the decision was overturned in a higher court, the incident received public outcry. And the Ministry of Finance decided to introduce a new bill, which turned out to be tougher than the previous one.
It provided for responsibility for the application of blockchain technology and other "money surrogates". However, bitcoins remained allowed and the Russians continued to use digital currency.
2016 began with new attempts by officials to ban bitcoins. The head of the Investigative Committee of the Russian Federation Bystrykin proposed to apply the most stringent measures to users using cryptocurrency, up to and including imprisonment.
A warning!
This was backed up by claims that the blockchain cannot be legalized afterwards, which is an excellent tool for fraud and speculation. That is, they traditionally tried to explain the ban on the use of monetary units by caring for the welfare of Russians.
It got to the point that Bystrykin announced that bitcoin is a pseudo-currency that anyone can issue in unlimited quantities. This demonstrated a lack of understanding of the essence of blockchain technology.
By the summer, the Ministry of Finance refused to support the law, since a ban on cryptocurrencies would make it impossible to use blockchain technology in the Russian Federation.
The latter was recognized as a necessary tool, which cannot be turned a blind eye at the present stage. By the end of the year, consideration of a draft law on the cryptocurrency market began. It exempted operators working on blockchain technology from liability.
WebMoney created a wallet for working with bitcoins and users were able to conditionally legally conduct operations with them. As a result, the ban on cryptocurrencies in the Russian Federation did not take place.
Attention!
The latest news about the legality of bitcoin in Russia this year differs little from past years. In March, the Ministry of Finance introduced amendments regarding the introduction of fines and imprisonment for up to 6 years for transactions with bitcoins, which should be equated with money laundering.
The law was not adopted. In October the fight continued. The President instructed the Central Bank and the Government to develop and implement mechanisms to regulate the movement of cryptocurrencies, mining and ICO. The order must be completed by July 1, 2018.
The following concepts should be officially defined: distributed ledger, which includes blockchain technology, digital asset, token, smart card and cryptocurrency.
At the same time, the law should be based on the principle of mandatory use of the ruble, which, according to the Constitution, remains the only legal tender in Russia.
Advice!
Officials should develop official organizational and regulatory requirements for mining, and a system for taxing received cryptocoins. A system of state regulation of "public attraction of funds in the form of tokens" (ICO) will also be developed.
It is indicated that it will be similar to the current scheme for regulating the initial placement of securities.
We can say that Russia today says “yes” to digital technologies. However, final conclusions can be drawn only after the law sees the light.
The fact is that the attention of the President and the Government to bitcoins suggests that the state has decided to take the technology under its control. At the same time, the state apparatus is making efforts to regulate the Internet. Time will tell how this will affect the security and demand for cryptocurrencies.
Bitcoins in other countries
There are three approaches to regulating the sphere of circulation of cryptocurrencies:
- China. The Chinese government has completely banned the circulation of any non-traditional or questionable financial instruments. Responsibility for their storage in any form and form has been introduced. At the same time, Chinese tycoons are leading in the field of mining and are the holders of the largest cybercapitals.
- European Union. In Europe, the circulation of any virtual money systems is completely allowed. The ban was introduced only on illegal financial transactions and criminal activities.
- USA and Japan. In these countries, the authorities have taken a pragmatic approach to blockchain. Operations are subject to taxes, and the initial offering of tokens is regulated similarly to the placement of shares.
Bitcoins in Russia
If someone doubts that the circulation of cryptocurrency in the Russian Federation is legal, they can take a closer look at the activities of large well-known financial companies.
Russian electronic payment systems, including Webmoney, have bitcoin wallets. It turns out that you can buy cybermoney quite legally.
Cashing out bitcoins through webmoney also does not cause difficulties or questions from the fiscal service or law enforcement officers.
Through the trading terminals of forex brokers, you can also buy and sell popular cryptocurrencies. All restrictions that web wallets have are due to the peculiarities of the work of the Forex exchange and electronic financial systems, and not to the current legislation.
source: https://cryptostate.ru/zakon/zapret-btc-v-rf
Will Bitcoin be banned in Russia in 2019
Despite the fact that cryptocurrencies are a relatively new phenomenon, they have already caused a lot of controversy around them. And basically they are connected with Bitcoins as the first and far from the most perfect digital currency.
A warning!
Some countries even want to ban Bitcoins, including Russia. Today we will figure out whether Bitcoin is banned in Russia or not yet.
There are many reasons why Bitcoins want to be completely banned. Apparently, states are simply not yet ready to change the current state of affairs in the financial industry, or they simply understand too well that Bitcoin can pose a serious threat to an established economy.
After all, the main feature of this coin is that its existence is not secured by anything. She has no real value.
Therefore, cryptocurrency is considered a monetary surrogate. And according to this logic, a restriction or even a ban should be imposed on Bitcoins in the Russian Federation, as required by the most zealous fighters for the financial purity of the country.
The current value of Bitcoin in monetary terms is determined by the speculative actions of the owners of this coin. Therefore, there is a huge risk that the coin will fall in price.
Attention!
This violates the rights of citizens who own assets in Bitcoins, as they will lose the money invested. And no one can compensate for these losses, because the cryptocurrency is decentralized. Here you can not blame the bankrupt bank or other structure. That is, no one will even think of paying compensation, because there is no one to pay.
Therefore, financial transactions involving fiat (ordinary) money and cryptocurrencies will be considered as a crime. Consider why these transactions would be considered illegal, based on a couple of provisions:
- Bitcoins are not tied to any bank or other real financial structure;
- The inability to control transactions made using this cryptocurrency. This anonymity is like a bone in the throat of all financial authorities. They believe that this property of Bitcoin cultivates crime.
Therefore, looking for an answer to the question of whether Bitcoins are legal in Russia, the topic of their legalization remains open. The authorities, one after another, put forward laws that either ban cryptocurrency altogether, or treat it quite loyally. Therefore, this topic requires a more detailed analysis.
Is Bitcoin banned in Russia
It is impossible to say with complete certainty whether Bitcoins are prohibited in Russia. And all because of confusing terminology. It’s just that no one in Russia knows what Bitcoins are.
At least at the official level. The concept of "Bitcoin" or "cryptocurrency" does not appear in any documents. And if there is no definition, then what kind of prohibition can we talk about? How can you ban something that doesn't exist?
Advice!
Of course, attempts to determine the status occur regularly. But so far, none of them has ended successfully. So far, the prohibition specified in Article 75 of the Constitution of the country is in force on the territory of Russia, which states that any money surrogates are prohibited in Russia.
And cryptocoins were arbitrarily assigned to these surrogates, not taking into account that digital currencies may simply be a new round of development in the financial industry. And all because of their lack of real value.
But after all, a financial surrogate does not yet mean “cryptocoin”. Therefore, trading in crypto-currencies continues, being in a semi-legal state. The history of this problem is really long. Let's consider it in stages:
- year 2014. Perhaps it was during this period that the crypto community was first worried about the legality of its actions. At that time, representatives of the Prosecutor General’s Office and the Central Bank of the Russian Federation argued that there was a big risk of declaring cryptocurrencies illegal.
True, then it was not a law, but rather a recommendation not to use Bitcoins. But a little later, an initiative came from the Ministry of Finance to create a bill, the purpose of which was to regulate cryptocurrencies and expand the term “money surrogates” we have already mentioned, adding Bitcoin and other cryptocurrencies to it. But there were many contradictions in the document, and it did not pass;
- 2015 A very scandalous year in relation to cryptocurrencies. Apparently, guided by the principle “what is not allowed is prohibited”, the Nevyansk court (Sverdlovsk region) decided to block a couple of sites working on Bitcoin mining in Russia.
Naturally, it was outright hack work, and the blocking did not last long. But the case in question was recognized as unique, and this prompted the Ministry of Finance to make another attempt to determine the status of Bitcoin in the country. But this time, the measures to control cryptocurrencies were much tougher;
- 2016 Just this year, the cryptocurrency acquired the status of a forbidden one. Why Bitcoins were banned in Russia, even the developers themselves could not explain. At the same time, the bill changed literally every couple of days. And the measures were more than harsh - imprisonment.
And the motive is simply brilliant - because Bitcoin is an excellent tool for a variety of fraudulent and speculative operations. But the same can be said about other currencies.
Maybe ban them too? In addition, for some reason they forgot that the issue of Bitcoin is only 21 million, because it cannot be such a serious speculative tool for crime.
In general, the law was not adopted, since it turned out that blockchain does not work without cryptocurrency, and everyone is interested in its functioning. Including the authorities. As an alternative to the ban, it was decided to tie Bitcoin to the concept of foreign currency.
But then foreign currencies would have to be banned, which did not suit anyone. In the end, it was decided that operators who understand the blockchain could be allowed to work with cryptocoins. Against this background, even the WebMoney company created its own equivalent of a Bitcoin wallet. But still, the status of Bitcoin continued to be conditionally legal;
- 2017 Last year, the country began to treat crypto-coins more loyally. There was no longer any talk of a complete ban, at least no official statements on this topic have been received.
It was only said that the uncontrolled use of crypto money can be risky for the users themselves. And by the end of the year, several draft laws on cryptocurrencies were published. Their creation was entrusted by Vladimir Putin. The document concerned the awarding of official status to Bitcoin and not only.
- 2018 year. It seems that this year will be a turning point in deciding the fate of cryptocurrency in Russia. Will Bitcoin be banned or not?
The current state of affairs is that the coin is in a semi-legal status. Only time will tell whether this will continue or whether there will be shifts in one direction or another. As you can see, the determination of the status of digital coins has been going on for years. There was everything - from the most optimistic forecast to the risk of a complete ban on Bitcoins in the country.
What does the cryptocurrency law say?
Due to the fact that the legal status of Bitcoins has long been in complete uncertainty, even now it is not clear whether cryptocurrency is allowed in Russia.
In principle, there is no direct ban, but there is no permission to use cryptocurrency either. For example, Bitcoins should not be used in trading operations, but they are traded anyway.
A warning!
If a user has a cryptocurrency wallet, then from the legal point of view, all the currency that is listed on it has no value. But money has a price. And the massive use of digital currencies is forcing government agencies to take action.
There are several potential developments in the situation. Some talk about a complete ban on Bitcoin in Russia, others about legalization (complete or partial).
Now the State Duma has prepared two draft laws related to cryptocurrencies. They will regulate financial relations related to digital technologies. For example, investments and not only. These two bills were prepared on behalf of Vladimir Putin.
Of course, two laws are not enough. But in the future, it is planned to create at least 50 regulations that will control this industry.
Attention!
According to A. Aksakov, such measures are needed to regulate the cryptocurrency market and warn people who want to work there from the threats and risks that arise in any uncontrolled territory. All transactions related to Bitcoin in Russia, according to these laws, will take place under the control of the Central Bank and the Government.
Let’s take a closer look at these cryptocurrency regulation laws:
- Draft Law on Digital Financial Assets. This bill defines what “cryptocurrency” and “token” are. And the smart contract is fixed at the official level.
It is indicated that a smart contract is a special protocol that can be used to conclude and maintain a trade agreement in blockchain technology. According to this law, tokens are property in electronic form, created using cryptography and computing tools.
The difference between a cryptocurrency and a token is in the number of elements. But they are not legal tender in the Russian Federation. In addition, this project contains information about crypto transactions, digital wallets, etc.
But one of the main nuances of the text is the definition of mining. According to the document, mining is “the activity of creating a cryptocurrency and (or) validating its creation in order to receive a reward in the form of a cryptocurrency.”
Mining currency is considered a business activity. Transactions with cryptocurrencies should be carried out only through operators. And they can only be legal entities, stock exchanges or professional participants. In addition, the text of the paper contains an answer to the question of whether the circulation of cryptocoins is allowed. They can be exchanged for rubles and other currencies.
- The draft law "On alternative ways of attracting investments (crowdfunding)". Thanks to him, ICO will be legalized to make it easier to receive investments using crowdfunding.
The State Duma plans to consider these two bills in April. This will be the first reading. But the second and third readings will be held in May and June of this year. If everything goes as planned, the bills will be adopted by the summer of this year. That is, it will be possible to invest in the deadlines set by the president.
And cryptocurrencies themselves are property, but not means of payment. Only professional investors will be able to buy tokens in the ICO, but you can invest no more than 50 thousand rubles. So, there is no full-fledged ban on cryptocurrencies in the bill, they will simply be limited.
What is the responsibility for using Bitcoins
Recently, the Ministry of Finance has prepared amendments that will make the law on cryptocurrencies. According to the new legislation, violators of the law on cryptocurrencies will be punished.
And it will be quite serious. These amendments were presented to the public in March of this year. Based on them, organizations that continue to use Bitcoins in their activities will be considered dubious. They can even be accused of money laundering.
The punishment is the following:
- As for individuals, they also cannot escape responsibility. Such people will have to pay a fine. Its size is up to 500 thousand rubles. If the fine cannot be paid, the guilty party will have to be punished in another way - to be deprived of liberty for 4 years;
- If an organized group is caught laundering income through cryptocurrencies, the size of the punishment will increase. Responsible persons will have to pay a fine in the amount of 500 thousand to 1 million rubles;
- Financial companies will be forced to pay even more if they are caught. For them, the fine is 1 million rubles;
- Well, professional participants in the securities market will pay the most for dark things related to digital money. Their fine ranges from 1 to 2.5 million rubles.
In addition, they will limit not only the distribution and use of crypto coins, but also the creation of new tokens. This would be a serious offence. Market participants or ordinary people who have resorted to the use of digital coins will lose their freedom.
The maximum term for which a securities market participant can be imprisoned is 7 years. Also, members of an organized group who were caught and did not prove their innocence can spend 6 years in prison.
These amendments to the law will soon be submitted for consideration. If it is accepted, members of the cryptocurrency community will not be envied.
They will lose their freedom of action. The law has too harsh conditions, which in all civilized countries would mean exactly the same thing as a nail hammered into the coffin of cryptocurrencies.
source: https://cryptomagic.ru/regulirovanie/zapret-bitkoina-v-rossii.html
The ban on the use of bitcoins in Russia in 2019
According to the current legislation of the Russian Federation (Article 75 of the Constitution of Russia), any money surrogates in Russia are prohibited.
These surrogates include a relatively recent cryptocurrency - bitcoin. The main feature of such a cryptocurrency is that it is not backed by real value.
A warning!
How much bitcoins are worth in terms of money is determined by speculative actions. Due to the lack of security with real value, there is a great risk of losing the value of this currency and, as a result, violating the rights of citizens who use it.
According to a representative of the Prosecutor General's Office of Russia, the use of bitcoins and their exchange for real money (both for rubles and for any other currency) by legal entities will be considered in accordance with the current legislation on combating the legalization of proceeds from crime.
Why the law prohibits the use of bitcoins
This cryptocurrency cannot be approved by the state for several reasons:
- Bitcoins are not tied to any particular bank.
- This monetary unit has no real value backing.
Despite the ability to control the transfers of this cryptocurrency, it is almost impossible to find out who and to whom makes the transfer.
Such anonymity made bitcoins in Russia a currency that criminals began to cultivate. This monetary unit began to be used to buy goods that are prohibited by law, such as drugs, weapons.
Attention!
It is worth noting that, according to the current legislation, it is forbidden to use cryptocurrency to purchase goods, pay for services, or exchange it for real monetary units.
This prohibition applies to both individuals and legal entities. The Ministry of Finance has already prepared amendments that will be introduced to the Code of Administrative Offenses in the near future. The essence of these amendments is to tighten sanctions for the issuance and use of any virtual currency.
Use of blockchain technology
Unlike money surrogates, the blokchain technology (blockchain) underlying bitcoin is not prohibited in Russia. This is explained by the fact that this technology can be applied not only in the field of finance, but also used for:
- digital signature system solutions;
- remote user identification;
- maintaining a register of real estate objects;
- maintenance of the land registry.
The list of possible applications of this technology does not end there. It is still being explored not only in Russia, but also in other countries.
In the Central Bank of Russia, a special working group was created in 2015 to study blockchain and the possibilities of its application. However, if the issue with the use of this technology is not resolved by the end of this year, its further study will be inappropriate.
Advice!
Employees of the Central Bank warn citizens and legal entities against exchanging cryptocurrencies for real goods or services, as well as for cash.
Since virtual money is more competitive than legal currencies, it spreads quite quickly.
According to experts, the turnover of such surrogates in Russia today amounts to one percent of GDP. If this figure increases to at least 10 percent, the use of cryptocurrency will become a real threat to the financial stability of the state.
fines
The amendments, prepared by the Ministry of Finance in March 2018, provide for penalties in the form of fines that every organization using bitcoins will have to pay.
Operations with this virtual currency will be regarded as doubtful and considered money laundering. For individuals, a fine of up to 500 thousand rubles or imprisonment for up to 4 years is provided.
If bitcoins are used by an organized group, the fine will be from 500 thousand rubles to 1 million rubles. For companies operating in the field of finance, the fine will be up to 1 million rubles. Professional participants in the securities market will have to pay from 1 to 2.5 million rubles.
According to the new amendments to be made to the Code of Administrative Offenses, the creation and use of virtual currency in Russia is also punishable by imprisonment.
The maximum term for members of an organized group is 6 years, and for those who are a participant in the securities market and use cryptocurrency, a penalty of imprisonment for up to 7 years is provided. This bill will be submitted to the State Duma in the coming months.
Professional journalist. Education SSU them. Pitirim Sorokin. Date: January 10, 2017. Reading time 5 minutes.
The legality of bitcoins in Russia is not defined. But they are illegal in certain circles. We will wait for changes for the better and observe what measures are being taken to legalize cryptocurrency.
Bitcoin - in Russia this word appeared recently. Not everyone understands what it means. Only "advanced" Internet users know the details and even use it. “I am a capitalist” will tell you about bitcoins, why are they needed and is their use legal in Russia?
What's this?
Bitcoins - digital currency, cryptocurrency, electronic cash. In literal translation from English, “bit” is a bit (a unit of information) and “coin” is a coin. Their creator is considered the Japanese Satoshi Nakamoto. He introduced the concept of bitcoin to the global internet system in 2009. But in fact, the development of digital money has been going on since the 80s of the last century.
Bitcoin is a peer-to-peer payment system, where the unit of the same name is used as the currency. The system is protected by cryptography. Digital currency is circulating around the world both as virtual money and real money. They can pay for goods, services, and also exchange for cash. The bitcoin exchange rate is traded against the dollar on special digital exchanges. It is both a means of payment and a means of accumulation.
This cryptocurrency is not issued by the banks of the world, is not backed by anything and has no legal regulation in many countries.
Indeed, the creation of a digital currency has no prerequisites other than the desire of the creator. A few years ago, any Internet user could create bitcoins only by running a certain program. Now mining requires huge capacities and funds.
In addition to bitcoin, dozens of cryptocurrencies “go” on the Web. Some of them are also traded on the stock exchange.
Why is bitcoin needed?
Recall that it is created “out of nothing”, so its rate can rise and fall at any time. However, now a huge system has already been created in the world around bitcoin. He participates in settlements between individuals and legal entities. Developed Western countries easily accept it as payment.
Bitcoin is considered an asset because its rate is set in the market similarly to other exchange rates or stocks, it is suitable for investing money in order to make a profit.
Bitcoin exchange rate
The exchange rate of the cryptocurrency against the ruble is not officially set, but you can calculate it based on the dollar exchange rate.
The graph shows the dynamics of the growth of the exchange rate of this cryptocurrency in recent years.
At the time of launch in 2009-2010, one bitcoin was worth a few cents. At the time of this writing (end of December 2016), the exchange rate is 935 US dollars. Moreover, literally in recent weeks, its price has jumped sharply from $790. In 2013, he already passed the $1,000 mark. Investing in cryptocurrency makes sense, but it is worth calculating the possible risks.
Do you want to earn on cryptocurrency? Learn, analyze and constantly monitor the digital market. But remember about criminal responsibility.
What can you buy with bitcoins in Russia?
The Central Bank calls bitcoins a surrogate for money and does not allow their official circulation. It will be problematic to buy anything on them in Russia. But you can pay with them on foreign sites or in companies with foreign roots. You just have to work hard.
E-currency is popular on the black market. She pays for drugs, weapons and other illegal things. Cryptocurrency has become actively spread in the criminal environment, and Russian legislators are afraid to bring it out of the shadows. There is an opinion that the official introduction of bitcoins into circulation will provoke another collapse of the economy.
Are bitcoins allowed in Russia?
The European Union is loyal to digital currencies, equated transactions with them to real money, and even removed the obligation to pay VAT from participants in transactions. The US and Japan also do not prohibit the circulation of digital money on their territory. True transactions are taxed.
China banned the circulation of foreign cryptocurrencies 2 years ago. But now the main holders of it in the world are Chinese citizens and companies.
The legality of bitcoins in Russia is still in question. As we said above, Russian legislators are in no hurry to bring the cryptocurrency into free circulation. But there is already progress in this regard. Since the summer of 2016, the Central Bank has been forming a banking consortium to introduce blockchain technology. It is built on the use of cryptocurrencies. This means that the legalization of bitcoin is not far off.
However, in Russia you can use bitcoins quite calmly, albeit illegally. You start a special wallet and change the incoming digital currency through an online exchanger for rubles.
The Central Bank says it will equate cryptocurrency transactions with laundering proceeds from crime. They are not regulated by law and have no legal obligations. In this area, there are many
The decrease in the reliability of the global monetary system and the parallel acceleration of the development of the crypto industry cause interest in cryptocurrencies around the world. Russia is no exception, where the number of users - supporters of digital money - is growing every year. At the same time, there are factors in the country that hinder the wide use of opportunities.
Let's see what "slows down" the cryptocurrency market in Russia, is there a ban on the world's most popular crypto asset - bitcoin (BTC) and can we talk about co-opportunities for its participation in the country's economy.
Is there a bitcoin ban in Russia?
There is still no unequivocal answer to the question “is bitcoin banned in Russia”, as, for example, one could say about the ban in China, Bangladesh, Bolivia, Ecuador or Vietnam. Rather, the Russian state, like most countries, faces the dilemma of accepting or resisting the evolution of the financial system.
At the moment, the position of Russia resembles an indecisive person who sees the benefits of the introduction of cryptocurrencies and blockchain, but does not dare to take further steps to develop them. Simply put, cryptocurrencies are not currently in the country, although parliamentarians have been “discussing and finalizing” the relevant regulatory framework for more than a year. However, the situation is the same in most countries of the world, where the attitude towards the cryptocurrency market is more than wary.
Features of bitcoin and its use in the world
Now there are about 3 thousand types of cryptocurrencies in the world, with a total capitalization of over $214 billion.
The most popular cryptocurrency was and remains bitcoin (BTC), which is not tied to any fiat currency, precious metals or raw materials. At the same time, individual countries and large platforms issue - on the contrary, backed by national currencies, gold and other things. The circulation of cryptocurrencies is not controlled by any state, but occurs exclusively between network participants.
The market dominance of BTC is currently 67.8%. In six months, thanks to the uptrend, the market share of the “king of cryptocurrencies” has grown by more than 17%. And this is natural, given that the coin is not only the most liquid among decentralized assets, but also has the most extensive network.
Initially, the exchange of BTC took place only among crypto enthusiasts, but a gigantic network was quickly formed that covered the whole world. Now numerous exchanges conduct bitcoin trading and conduct millions of transactions daily with various cryptocurrencies. And most importantly, day after day bitcoin is becoming part of the global payment system, to which many online platforms, services, shops, organizations and institutions, including government ones, are already connected.
BTC is accepted for payment in shops, restaurants, hotels, transport. Among them, there are those where the coin is used as an alternative to bank accounts and cards, since the maintenance of financial institutions in these countries is underdeveloped or very expensive.
A few examples:
- In the US, BTC is recognized as property and allowed to be traded from a state auction;
- In Singapore, cryptocurrency is used as a means of payment, from which a tax is levied on both goods and services;
- In Hong Kong, cryptocurrencies are considered "virtual value" and are also used when paying for services and goods;
- In Australia, BTC is considered property and is even used in business-to-business transactions;
- In Japan, bitcoin is legal tender.
- illegitimate...
For BTC, it has already been installed in many countries of the world, including Russia.
However, BTC has a big drawback - the coin is characterized by high volatility, which sometimes reaches more than 90%. So, the coin rate continues to be overly mobile and dependent on supply and demand.
The position of bitcoin in Russia
The uncertainty of the position of bitcoin in Russia is relative, as there is a clear tilt towards the ban in the position of the authorities and regulators. For example, the head of the Central Bank of Russia, Elvira Nabiullina, calls cryptocurrencies “money surrogates for money laundering,” and President Vladimir Putin does not hide his skepticism about cryptocurrencies.
There is another important factor that fundamentally hinders the development and adoption of regulations - the lack of elementary knowledge about decentralized assets, the features of this technology. And where there is no knowledge, there is always the fear of the new, the unknown, the uncomfortable. As a result, the tactics of "prohibition" and avoidance of solving problems are chosen.
The bans are usually explained by concern for financial security and the presence of high risks of circulation and use of cryptocurrencies, namely:
- Anonymity does not allow to accurately personify the responsibility for crypto exchange and trading, which leads to an increase in fraudulent schemes, illegal activities, including money laundering;
- The high (according to Rosfinmonitoring, BTC volatility is 92%) and the dubious nature of transactions with them, often associated with exchange hacks and technical failures, make it easier to manipulate the market.
But if you delve into the meaning of what is happening, then the most likely reason for the ban on crypto is the desire to control the functions of money emission, i.e. retain full control. The authorities are trying to prevent the formation of alternative sources of emissions that are not amenable to regulation by the state.
At the same time, it is almost impossible to prohibit crypto-operations. You can reduce the exchange for fiat money by closing crypto exchanges, but for a ban, including BTC, you will need to gain access to each device, and this is an interference with privacy, which is prohibited by the Constitution of the Russian Federation. However, as practice has shown, this dilemma is easily and quickly resolved by new laws or amendments to them.
Banks and Cryptocurrency
As in many countries, the cryptocurrency policy of Russian banks directly depends on the Central Bank (CB), whose position has remained unchanged for years - operations with cryptocurrencies are outside the legal field, which means they are illegal.
At the same time, the development of the crypto industry is the global mainstream. Every year, an increasing percentage of people are mastering cryptocoins. The Central Bank must know this. Monitoring the situation, bankers are probably aware that the share of bitcoin (BTC) in the country's GDP is the larger, the higher the corruption index.
Venezuela, which had a CPI of 18 last year (one of the lowest in the world), has a bitcoin market of 0.2326% of GDP, according to Transparency.org. Then follow Nigeria, Russia, Colombia, Ukraine, Kenya…
In addition to inflation and corruption, the growth of BTC purchases in the Russian state is affected by US sanctions (in particular, the sanctions of the Office of Foreign Assets Control of the US Department of the Treasury (OFAC)) - they significantly complicate international transactions. So, bitcoin is used to bypass them.
In August-September 2019, there was a certain shift in the banking sector in relation to cryptocurrencies - rather, a negative one. For example, the Association of Banks of Russia (ADB) proposed to eliminate the anonymity of bitcoin owners. This approach can significantly affect the attitude towards coins. According to ADB Vice President Anatoly Kozlachkov, there is a lack of a proper legal basis for working relations between Russian banks and the crypto market.
The ADB report claims that the country's intelligence agencies have the ability to determine how many crypto coins each user owns. In other words, banks propose to legalize the instruments of control over users' cryptocurrencies. This is bad enough news for investors who value anonymity, and for blockchains themselves, as it could slow down the development of the technology.
For its part, the Central Bank is considering the possibility of issuing a banking digital currency (CBDC, central bank digital currency), which, according to its characteristics, is more like a fiat than a decentralized asset. In April, the financial institution published an analytical note “Does Central Bank Digital Currencies Have a Future?” detailing the benefits of using a CBDC. Currencies can be directly used by both legal entities and individuals. There are two types of CBDC: retail (Retail) and wholesale (Wholesale).
So, the Russian banking sector is still against any legalization of bitcoin in the country.
Definitely, the decentralized nature of cryptocurrencies, first of all, puzzles regulators with the development of a regulatory framework, without which it is impossible to create legitimate mechanisms for controlling and managing the crypto industry, including, oddly enough, organizing a ban on bitcoin in Russia.
Three laws are important for the Russian crypto market:
- No. 424632-7 "On Amendments to Parts 1, 2 and 4 of the Civil Code of the Russian Federation (On Digital Rights)".
- No. 419059–7 “On Digital Financial Assets”.
- No. 419090–7 “On Attracting Investments Using Investment Platforms” (or Draft Law on Crowdfunding)
The first of them was at the beginning of March 2019, the second - about crowdfunding - on August 2. But the most significant bill for the crypto industry “On Digital Financial Assets” is still under consideration.
Crowdfunding Law
The law "On attracting investments using investment platforms" will come into force on January 1, 2020. It provides for a number of restrictions on the number of investments by unqualified investors - no more than 600,000 rubles per year, and on the list of persons who can attract investments. The latter can only be legal entities included in the register of the Central Bank of the Russian Federation (Article 14). The only person to whom the law does not impose special requirements are those who acquire utilitarian digital rights on the investment site.
Experts have identified many contradictions in the law. So, in the document designed to regulate the investment policy of blockchain sites, there is no key term - "cryptocurrency". While the platforms are aimed specifically at attracting investments in cryptocurrency, and not in fiat money. As a result, the goal of legalizing this type of investment has not been achieved. And this is already a serious barrier for foreign investors who need a loyal jurisdiction to work.
Law on Digital Financial Assets
Analyzing the Law "On Digital Financial Assets", legal scholars point to serious shortcomings. In particular, for a long time there were no central concepts, cryptocurrencies and. Now they have been submitted, but the matter did not reach the final adoption of the document: on March 20, consideration for April 2019, then for May, July ... the beginning of autumn. The personal of President Vladimir Putin did not speed up the process either - to introduce the regulation of digital assets before July 1 this year.
In September, Dmitry Medvedev set a new deadline for the adoption of the law - until November 1. Live, the head of the Russian government explained the delay by the fact that the laws do not keep pace with the rapid development of technology.
“Now let’s start describing the notorious blockchain in the law. If you give a definition now, in a year it won’t work.”
Dmitry Medvedev
In addition, in his opinion, it is necessary to clearly separate the blockchain and cryptocurrencies: if the blockchain is a useful technology, then cryptocurrencies are a speculative asset.
So, it is highly likely that Russian legislators will somehow be able to create a legal precedent for regulating blockchains without legalizing cryptocurrencies.
And there is still a package of almost 50 bills on the digital industry ahead, which are planned to be adopted by 2024.
Status not defined
As long as there is legal uncertainty, abuses by both government agencies and financial organizations are possible, as is the case with a client of Tinkoff Bank. After selling the remaining cryptocurrency on , the user transferred funds to his account with this bank, and received not only a complete blocking of accounts and cards, but also a call asking him to tell about the source of the transfer. The explanation that the money was received “for the sold cue ball” was followed by a proposal to terminate the service agreement and provide documents and a questionnaire within the framework of the requirements of Federal Law 115 “On counteracting the legalization (laundering) of proceeds from crime and the financing of terrorism”. Only thanks to public outcry, the client did not lose his money.
The illegal status of cryptocurrencies, the lack of exchange rules and the impossibility of keeping records will push businesses to foreign jurisdictions. Also, ordinary users who want to master the crypto market will be forced to turn to the services of foreign exchanges, many of which do not work with Russian bank accounts. Therefore, to withdraw fiat money, you will need the participation of a foreign bank. Will the Russian economy benefit from this?
The lack of regulation also means an increase in illegal activities. With which, in March 2018, the Ministry of Finance agreed on a draft law to criminalize the use of cryptocurrencies. For the issuance and exchange of cryptocurrencies, it provides for criminal liability in the form of imprisonment for up to four years.
So, the country is now making an important decision for the future of digital markets: on the one hand, the introduction of bitcoin into the financial system will open up many new opportunities for the development of various sectors of the economy and not only, since innovative platforms can change all areas of life; on the other hand, the denial of legal status to cryptocurrency will significantly slow down, and somewhere stop, the development of new technologies and certainly will not increase investment in the Russian economy.
The ban on cryptocurrencies in Russia is also the topic of our recent video, which we advise you to watch:
Prerequisites for the development of the Russian crypto industry
In general, despite the unfavorable conditions, the cryptocurrency industry in Russia is gradually growing.
First of all, this is facilitated by the availability of qualified blockchain developers with a high level of competence, with very low wages - much lower than, for example, in Europe. How much demand today for professionals in the field of cryptocurrencies and blockchain can be judged only by two figures from the Hired report - the demand for blockchain developers increased by 517% by the beginning of the year, and the average salary was $105.4 thousand.
Also important is the presence of excess and cheap electricity in the country, which indicates good prerequisites for the development of the mining industry. In addition, mining does not contradict Russian law and is considered as an entrepreneurial activity. According to the head of Eletro.Farm, Dmitry Ozersky, the power of Russian bitcoin mining is now somewhere around 600 MW, which is almost 10% of the total electricity consumption that supports the global bitcoin network. Siberia is of particular interest in this regard: the presence of powerful hydroelectric power plants and a cold climate are almost ideal conditions for a mining farm.
At the end of September, the same Association of Banks of Russia found its own way to legalize cryptocurrencies by proposing to equate mining “to finding money” and, accordingly, to charge taxes on transactions with cryptocurrencies. However, the miner does not find a ready-made “treasure”, but uses the power available to him to create a cryptocurrency. The ADB proposal gives grounds to consider the mined coins as a thing and to make barter transactions with them. In this case, the asset cannot be considered a means of payment or a surrogate for money.
For miners (and not only), the State Duma plans to introduce administrative liability in the form of fines for any actions related to cryptocurrency that are not provided for by Russian law.
The growth of over-the-counter investments in bitcoin in Russia also speaks of a positive trend. Currently, the average daily trading volume of leading cryptocurrencies such as Bitcoin and Ethereum reaches $50 million in the capital alone, which is a lot given the legal uncertainty.
Another favorable factor is the interest of large crypto exchanges and fintech companies in increasing their presence in Russia, even despite the sanctions. For example, the largest crypto exchange in terms of trading volume plans to open its office in Russia. True, this will happen only after the adoption of the regulatory framework. The exchange does not restrict access to its platform for Russian users, refusing due to US sanctions to Iran and. Other exchanges planning Russian expansion or supporting Russian-speaking users are KuCoin, LocalBitcoins, Hodl Hodl.
One of the world's largest cryptocurrency exchanges Huobi back in November 2018 in Russia - Huobi Russia. And just the other day, the fintech company Revolut announced its arrival on the Russian market - it offers a debit card and an application with support for fiat money and cryptocurrencies.
Without a doubt, the limiting factor for the adoption of cryptocurrencies is the very low level of knowledge about cryptocurrencies and blockchain technology. For the majority, the idea is made up of television programs, most often repeating the rhetoric of the authorities. According to a survey conducted by the All-Russian Public Opinion Research Center (VTsIOM), more than 56% have only “heard something” about digital money. Another survey from the research holding Romir confirmed that 44% of Russians have “some” idea about cryptocurrencies, and only 13% confirmed that they understand the principles of digital tokens.
And yet, no matter how many obstacles are created by the authorities and regulators, interest in the cryptocurrency industry is growing in Russia. Suffice it to say that the country is in the TOP-20 states, the population of which most of all demonstrates the use of cryptocurrency. According to a recent OKEx report, almost 75% of the total traffic of the 53 major crypto exchanges comes from this top 20. The United States (14.2%) ranks first in the crypto exchange. Russia accounts for 7.4%. Other leading countries are Brazil with 6.1%, Turkey with 5.4% and China with 5.1%.
In other words, highly qualified fintech specialists, the availability of excess and cheap electricity, the development of OTC platforms, the interest of major global players in the crypto industry are favorable prerequisites for the development of the Russian crypto market. It remains to reach out to the Russian government, parliamentarians and the Central Bank, but this is a separate and very long conversation.
In any case, sooner or later, the inclusion of cryptocurrency in Russia will happen precisely because it is a natural part of the system-wide process of developing the digital economy and is the main direction of financial transformation. The sooner the authorities and legislators understand this, the better it will be for the future of the country.
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