A document by the federal tax authority in Russia has revealed its first official stance on the legal status of cryptocurrencies and it makes for good reading for adopters of bitcoin and other digital countries in the Russian federation. Bitcoin cannot be blocked or banned…
A document by the federal tax authority in Russia has revealed its first official stance on the legal status of cryptocurrencies and it makes for good reading for adopters of bitcoin and other digital countries in the Russian federation.
Bitcoin cannot be blocked or banned as they can be deemed foreign currency transactions according to Russian laws.
First reported by regional publication Coinfox, the document deems trading of bitcoin and other digital currencies as foreign currency transactions according to Russian law. The notable parallel means that bitcoin transactions do not require financial reporting to be submitted to authorities, which, in extension means transactions of bitcoin cannot see any legal prohibitory moves.
The official document is published in the same year that has seen the Russian Finance Ministry repeatedly attempt to ban bitcoin in the country, while going so far as to criminally prosecute adopters or miners of digital currencies in Russia.
A summary of the document was shared by Artem Tolkachev, director at Deloitte for legal services for technology and head of the Russian Blockchain Community who pointed to several takeaways from the document. For instance, bitcoin, so often deemed a ‘money-surrogate’ by Russian officials calling for its ban, might not fall under any specific laws as the Russian Federation does not explicitly contain definitions for surrogate money and predictably, a cryptocurrency.
Furthermore, there is no law that allows for the legal prohibition of cryptocurrency transactions, as they will be defined as foreign currency transactions. While document makes note of the possibility of cryptocurrencies being used for money laundering purposes or terrorism financing, enforcing KYC rules would serve as a simple solution.
The fervor for banning bitcoin and other ‘money surrogates’ has seen the tide change as the year has wound down, with the plan on indefinite hold since October and few or no developments since.
What began as a proposal for a 4-year prison sentence in late 2015 saw the Ministry of Finance in Russia soon tweak its proposal to a 2-year corrective labor sentence in early 2016 before wishing for a comprehensive 7-year prison term along with massive fines for bitcoin users in the country. Other federal authorities, including the Interior Ministry and the Ministry of Justice questioned the proposal and even outright refused to agree on revised drafts submitted by the Finance Ministry.
It all led to Deputy Finance Minister Alexei Moiseev – who markedly led the charge to ban bitcoin from as early as 2014 – stating this year following the many repeated hurdles in seeking a ban, the following:
Perhaps, in the view of the development of technology, a frontal ban [of bitcoin] will not do very well.
Any stigma surrounding bitcoin as an illegal or an unfavorable currency in Russia was also put to bed by Herman Gref, the CEO of Russia’s largest bank, Sberbank, who recently revealed in a public forum that he was a bitcoiner.
Hat tip to Coinfox.
Featured image from Shutterstock.
Last modified: May 21, 2020 10:11 AM UTC