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Breaking Down Crypto Regulation in Russia – Facts and Recent Development

Author: Qadir AK

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Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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  • The mass adoption of Bitcoin is growing regardless of regulations
  • Russia encourages Blockchain Technology, Sidelines Cryptocurrencies
  • Bitcoin Theft Is Not a Crime is Russia

Every bitcoin market is witnessing a surge in its users and bitcoin trading volume. Well, some countries address cryptocurrencies like bitcoin by regulating them while some are not even allowing the trading and considering it as legal. 

Russia is one of the countries where-in the Bitcoin and other cryptocurrencies are not welcomed like the blockchain. The country wants to hit harder on cryptocurrencies and its activities by imposing strict laws and taxes. But the crypto enthusiasts in Russia regardless of the laws proposed tend to carry out trade relentlessly.

Crypto Regulations in Russia – Yes to Technology, No to Crypto

The Russian Crypto companies will witness hard days as the government is in the process of regulating cryptocurrency. A bill has already been proposed in the lower house by Russian law-makers which recommends a complete ban on the issuance of new cryptocurrency and circulation of the existing. 

Additionally, the individuals will be penalized for buying crypto with cash or transferring to accounts operating in banks in Russia.and also fines up to $7000. Whereas, the companies that issue virtual currencies without approval from the Russian bank will be fined up to 2 million rubles($28,000).

If the bill transforms into law, the individuals who hold cryptocurrencies will be forced to disclose their holdings and also explain how they acquired them.

However, the Russian Ministry has opposed the bill and said that people can use technology to bypass the ban and use it. This, in turn, will give birth to a large ‘Black-market’ which cannot be controlled. 

You may also be interested in – What Does New Crypto Regulations in Switzerland Mean for Crypto Companies?

Russian Courts – “Bitcoin Theft Is Not a Crime”

This came into notice following a dramatic incident in Russia. Very recently, Russian criminal court ruled a case of 2018 which is eventually related to cryptocurrencies. Long story short, Back in 2018, two men, Petr Piron and Eugeny Prigozhin pretended to be officers of Russia’s Law Enforcement and counter-terrorism agency, the Federal Security Service(FSB).

They threatened the crypto trader, kidnapped, and forced the trader to pay them 5 million rubles (over $70,000) alongside 99.7 BTC. The victim had transferred 99.7035 BTCs and some other crypto tokens [Digibyte and BitShares] to kidnappers. They then sentenced to eight- and ten-year prison sentences. 

The trader further approached Saint Petersburg District Court to force the thieves to repay the total funds. However, after a series of arguments and procedures, the court ruled the case partially in favor of the victim. Accordingly, thieves are liable to repay the stolen 5Million rubles whereas it didn’t grant the order for stolen cryptocurrency. 

What caught everyone’s eye was, the court in its judgment specified that cryptocurrencies are not considered as property. The nib of the matter is that the cryptocurrency in the Russian Civil Code is not recognized as a legal tender or its surrogate. Therefore they cannot be deemed property for the purpose of a criminal case. And hence, no need to transfer back.

Cryptocurrency [theft] is not a crime against property. Due to the lack of legal status, it is not possible to recognize it as an object of civil law, concluded Court.

However, the victim may still knock civil court and try his luck.! 

The Rise of Bitcoin Activity in Russia

Despite such a stringent law, the Russians continue to deal with the cryptocurrency activities. The crypto market has witnessed a surge in the P2P Bitcoin exchanges and crypto traders. 

As per reports, the trading volume and number of active users has increased dramatically. Especially since March despite Crypto Regulation in Russia is vague.

Representatives from the Russian exchanges from Binance, Garantex, and EXMO focused on the growth in a number of users in Russia during the lockdown period, from March to June.

However, the increase in the interest in cryptocurrency comes in the time when the government is on the verge of introducing tough restrictions on them.

The Final Note

Russia always has ‘a step further and a step back’ when it comes to cryptocurrency. Since its inception, Per the series of reports, Russia has always intended to regulate it.

Hence since 2018, the bill has been thought off, drafted, and finally been introduced. The Central bank also is in favor of a complete ban.

But can any government ban it completely??

It’s very tough. As we all know cryptocurrencies cannot be banned completely. We need to wait and witness the post effects of the bill after it gets converted into a law. Since, there’s no specific Crypto Regulations in Russia, the Russians are now more into P2P Bitcoin transactions.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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