Translated by
2019/11/29 17:50:33

Cryptocurrencies in Russia

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Bitcoin in Russia

Main article: Bitcoin in Russia

Cryptocurrency mining

2019

B of Russia is wanted to be imprisoned for 8 years for payment of purchases in bitcoins

On November 29, 2019 it became known that the Central Bank and Rosfinmonitoring prepare an initiative of prohibition of use of cryptocurrency for payment of purchases in Russia.

So far punishment for receiving the fees or payments of goods and services using digital money in Russia is not provided. However, according to the statements of sources of Izvestia, with prohibition can impose also criminal liability with terms to 5-8 years of imprisonment.

It became known that the Central Bank and Rosfinmonitoring prepare an initiative of prohibition of use of cryptocurrency for payment of purchases in Russia
It became known that the Central Bank and Rosfinmonitoring prepare an initiative of prohibition of use of cryptocurrency for payment of purchases in Russia

Information on preparation of an initiative was not confirmed in the Central Bank, but noted that are ready to support her. The same position is taken also by the Ministry of Finance.

«
We do not see any premises that cryptocurrencies began to be used as means of payment — the assistant department head of banking regulation of the Ministry of Finance Alexey Yakovlev on the round table devoted to development of cryptoeconomy in Russia and the world said.
»

The managing partner of EBR law company Alexander Zhuravlyov considers prohibition on use of cryptocurrency as the payment instrument the step expected from the Central Bank. According to the expert, at first it is necessary to define the legal nature of cryptocurrency, and final understanding of the status of digital money will be after adoption of the bill "About TsFA".

It is expected that the initiative of the Bank of Russia and Rosfinmonitoring will have to fight against crime in the field of virtual money, however, according to the head of the Center RussiaRANEPA Antonina Levashenko's OECD, it will not help to destroy the "grey" sector but only will deprive the budget of taxes from transactions with cryptocurrencies.

One of representatives of the Russian cryptocommunity in a conversation with Izvestia reported that, though rumors about criminal liability for use of cryptocurrency go, the authorities, most likely, will be limited to a small amount of demonstrative affairs.[1]

Russia intends to create the cryptocurrency with BRICS countries

On November 15, 2019 it became known that Russia and the participating countries of BRICS group can develop single payment system on the basis of special cryptocurrency. The head of the Russian Direct Investment Fund (RDIF) Kirill Dmitriyev reported about it. Read more here.

The board of the Ministry of Internal Affairs charged to develop the mechanism of confiscation of cryptocurrency

On November 7, 2019 it became known that a rho to results of the meeting which took place on November 1, 2019 the Board MINISTRY OF INTERNAL AFFAIRS RUSSIAN FEDERATION charged to profile departments to develop a legal mechanism of arrest of virtual assets cryptocurrencies, in particular, for their confiscation. Till December 31, 2021 the offers should provide the Ministry of Internal Affairs Rosfinmonitoring State Office of Public Prosecutor Investigative Committee Ministry of Justice, to FSB, FCS and FSSP with participation Supreme Court.

For November, 2019 legal status of cryptocurrency in Russia is not defined therefore in order that it could be confiscated, it is necessary to recognize cryptocurrency either a cash equivalent, or goods. The bill of the digital financial assets (DFA) is drafted for regulation of the sphere of cryptocurrency in Russia since 2017. The document was accepted by the State Duma in the first reading in May, 2018, but since then still prepares for the second reading.

The bill of TsFA is intended for regulation of release, accounting and the address of digital financial assets. According to the document, like those should be considered the digital analogs of debentures, bonds and rights of equity participation issued through a blockchain. The bill also enters the concept "digital currencies", but does not give to this term uniquely identifying.

According to experts, development of mechanisms of confiscation of cryptocurrency actually means its legalization. Nevertheless, in international and even in the Russian practice cases of confiscation of cryptocurrency by a court decision for lack of the legislation regulating it already repeatedly met.

Confiscation of cryptocurrency by a court decision can be theoretically entered also in Russia. However technical difficulties with access to cryptocurrency wallets are in that case inevitable. To law enforcement authorities it is necessary not only to catch somehow credentials of the owner of a purse, they will also need to prove that the purse belongs to this particular person.

According to the results of a meeting on November 1 the Board of the Ministry of Internal Affairs also charged to develop effective methods of blocking of a signal of cellular communication in prisons and made the decision on creation in the structure of division for fight against cyber crime[2].

Venezuela intends to pay Russia in cryptocurrency for construction of housing

At the beginning of November, 2019 it became known of plans of Venezuela to pay Russia in cryptocurrency for construction of housing. Experts consider that such transactions are still impossible. Read more here.

Will permit the Russian cryptoexchanges trade in foreign cryptoassets

On November 1, 2019 it became known that will permit the Russian cryptoexchanges trade in foreign cryptoassets. Trade in bitcoins and other cryptocurrencies will remain under a ban.

Foreign cryptoassets are understood as digital analogs of debentures, bonds and rights of equity participation, i.e. tokens.

It became known that will permit the Russian cryptoexchanges trade in foreign cryptoassets
It became known that will permit the Russian cryptoexchanges trade in foreign cryptoassets

The new version of the bill "About Digital Financial Assets" (TsFA) was prepared for the second reading in the State Duma, RBC tells.

According to the project, release of tokens within Russian law not only individual entrepreneurs and legal persons, but also foreign firms, but only in a certain information system will be able to be engaged.

Only the legal persons working under Russian law and included in the special register which will be under control of the Bank of Russia will be able to act as operators of such IT systems. In practice the credit institutions and depositaries included in the Central Bank in the register will be able to become operators.

Authors of the bill initially suggested to consider TsFA any rights issued through a blockchain including to property or the real estate, but to the second reading from the bill removed such offer.

The bill comprises the concept "digital currencies". They are understood as "set of the electronic data (the digital code or designation) used in information systems and offered as means of payment". At the same time means of payment is not official monetary unit of Russia, the foreign state either international monetary or unit of account. They cannot be released and used in information systems which are used for release of digital assets.

The head Sputnik DLT blockchain integrator Artem Tolkachyov considers that the bill completely brings the existing cryptocurrencies out of jurisdiction of the action and regulates only digital rights and also certain digital currencies which can be created in coordination with the Central Bank in information systems.[3]

Russian Security Council: cryptocurrencies are necessary for terrorism financing

Cryptocurrencies are necessary for terrorism financing, said in the interview to Rossiyskaya Gazeta published on Sunday, October 13, 2019, the Deputy Secretary of the Security Council of the Russian Federation   Yury Kokov.

«
For financing of the activity terrorists actively use cryptocurrencies, the international Muslim humanitarian funds. The firms controlled by them are engaged in speculation on the stock exchanges, invest means in the real estate, in a row legal branches of the economy, participate in criminal business in the territory of the different countries — he reported.
»

Deputy Secretary of the Security Council of the Russian Federation Yury Kokov
Deputy Secretary of the Security Council of the Russian Federation Yury Kokov

Kokov emphasized that "the coordinated and resolute actions of all international community" are necessary for counteraction to terrorism. Control over activity of terrorists on the Internet should become one of the key areas of work in this way.

«
We should mean that, in fact, today the global network for terrorists is the most effective mechanism of management of separate forces and means including financial. In these conditions preserving of disagreements between the countries in estimates and approaches to a role and the place of a global network in public life is inadmissible — he told.
»

According to the undersecretary of the Russian Security Council, development of information and communication technologies allows terrorists to expand more actively geography of their destructive ideology, to join ranks and to raise financial resources, to perform the hacker attacks.[4]

At the end of August, 2019 the legal community in Russia  suggested to create  "digital prosecutor's office" which will specialize in the criminal cases connected with cryptocurrency fraud. According to supporters of an initiative, it will allow to increase quality of investigation of crimes in the digital sphere. By October of the 2019th law-enforcement practice in the digital sphere is almost absent as the law "About Digital Assets" is not adopted.

Owners of cryptocurrency in Russia can lose anonymity

On September 12, 2019 it became known that the Banking Association of Russia (BAR) prepared the concept of turnover of the decentralized cryptocurrencies which will deprive of anonymity of owners of virtual digital assets. This position was sounded by the vice president of ABR Anatoly Kozlachkov.

The concept assumes a possibility of collecting digital assets within enforcement proceeding, at taxation or bankruptcy. Means can be confiscated for benefit of the credit institution which issued a loan to the player of the market. Accessory of cryptocurrency will be established using judgments.

«
"The model assumes that agents of the market will be able to provide services in establishment of owners of digital assets on the request of the creditor. It will give the chance to creditors within judicial process to determine the fact of accessory of digital property to the particular person",

'Anatoly Kozlachkov, the vice president of ABR noted'
»

Identification of the owner of cryptocurrency is important as the court at decision-making needs to have all information on this person, including data on quantity of tokens and the password from kriptovaplyutny purses. If the holder of digital assets refuses to provide such information, then ABR suggests to enter criminal sanction concerning this person. This legal model will allow to provide protection of transactions with virtual assets and also will reduce the risks connected with anonymity.

The ARB also suggests to enter taxation of transactions with cryptocurrencies at payment of goods and services. Charges are offered to be entered also from operations on purchase and sale of tokens. The system of collecting taxes will be similar to that which works for investors in security market. Also it is offered to enter regulations into the tax law according to which individuals will be obliged to declare purchase of cryptocurrency and to pay taxes after its sale.

«
"Such legal model will allow to take away on the one hand the tool from malefactors, and with another — will give the chance to legally use the tool and to pay taxes",[5]

'Anatoly Kozlachkov, the vice president of ABR noted'
»

Sberbank asks clients to explain income from cryptocurrencies

In the middle of May, 2019 it became known of requirements of Sberbank to explain income which clients gain from cryptocurrencies. The letter from credit institution was published  at himself on the page on Facebook by the co-founder of the platform for cryptotrading of Toxenbox.io Vladimir Smerkis.

In the message which is addressed not to Smerkis, but one of clients of Sberbank who wished to save anonymity the bank asks to send the cryptopurse address, a nickname, information on farms and premises for mining and also the paid bills for electricity. Smerkis told that the receiver of the letter really transferred to Sberbank the money received from exchange of cryptocurrencies  what notified bank on.

Sberbank demanded from the client to report on cryptocurrency mining
Sberbank demanded from the client to report on cryptocurrency mining
«
Very strongly perturbs us how Sberbank can appeal terms which in  the Russian legislation  do not exist yet  —   Smerkis said.
»

According to him, unclear how Sberbank will be able to estimate legality of the transactions which are carried out with cryptocurrency in the absence of the law.

Sberbank requested these data, having referred to law No. 115-FZ (About counteraction of legalization of income gained in the criminal way and to terrorism financing).

The bank warned that data need to be provided within 5 days, otherwise to the client will turn off service.

Many users in comments on the publication of the letter to Facebook considered a request fraud, without having believed that the bank could request such data. But in Sberbank confirmed to the Forbes magazine that the letter was sent by bank, but not swindlers.

We will allow such request if the bank needs to justify a source of means of the client according to Federal Law No. 115 as the state does not limit a circle of information requested from the client in any way, the head of Tokenomica Artem Tolkachyov argues (earlier the CIS was engaged in a subject of cryptocurrencies and a blockchain in "Deloitte").

According to him, there is nothing new in a similar request: according to the same scheme also European Banks work, but in Russia the expert hears about a case for the first time.[6]

The rating of the countries with the best conditions for development a blockchain projects and cryptocurrencies. Russia on the 18th place

In March, 2019 Flying University published the rating of the countries in which, according to experts, there are optimum conditions for development and development of the business projects connected with a blockchain and cryptocurrencies. Russia was at the 18th place of rating. Read more here.

The State Duma adjusted digital rights without blockchain and cryptocurrencies

On March 6, 2019 it became known that the State Duma adopted the bill "About Digital Rights" in the second reading. The bill is the top level document: it is amendments in the Civil Code (CC) which purpose – to enter basic concepts for functioning of digital economy.

The bill was drafted in 2018 by the Chairman of the State Duma Vyacheslav Volodin and the head of parliamentary committee on the state construction and the legislation Pavel Krasheninnikov. The bill was approved in the first reading in May, 2018, however then underwent significant changes.

Building of the State Duma of the Russian Federation

In the version provided to the second reading it is meant "digital rights" (an analog of tokens) "liability and other laws, contents and which conditions of implementation are defined according to rules of the information system answering with the sign established by the law". Transfer, pledge, encumbrance and other order by digital rights are possible only in an information system without the address to the third party.

An owner of the digital right is the person which according to rules of an information system has an opportunity to dispose of them. Transition of the digital right on the basis of the transaction does not require the consent of the person obliged by such digital right.

In the previous version of the bill it was said that digital rights function in the information system answering to the signs of the decentralized information system established by the law. So such system had to work at blockchain technology.

The provided bill assumes that the written transaction can be performed using the electronic and other technical means allowing to reproduce on the material carrier in invariable a type contents of the transaction. At the same time the requirement about existence of the signature is considered executed if any method allowing to define authentically the person which expressed a will is used.

The special method of reliable determination of the person which expressed a will and also additional requirements to which there should correspond the form of the transaction can be provided by the law, other legal acts and the agreement of the parties and be provided effects of non-compliance with these requirements.

The specified requirements to written transactions will be applied also to written legally significant messages. At observance of the specified requirements of the solution of meetings of participants on which vote was taken using electronic or other similar technical regulations will have the legal importance.

The agreement can be in writing signed by drawing up one document signed by the parties including electronic, or exchange of letters, telegrams, electronic documents or to other data meeting the specified requirements to the written transaction.

The agreement of the nominal account and the insurance contract can be the same way signed. At the same time drawing up the will using electronic or other technical means is not allowed.

The bill legalizes smart contracts though this concept of the document is not used. According to the bill, "terms of transaction can provide execution by its parties of the obligations arising from it at approach of certain circumstances without separately expressed additional declaration of will of its parties directed to obligation fulfillment by application of the information technologies determined by terms of transaction".

Regarding work with Big Data it is said that the duty of one of the parties or both parties not to make during the certain period of action as a result of which information can be disclosed to the third parties can be provided in the agreement by which the contractor undertakes to make actions for providing a certain information to the customer (the service provision agreement on providing information).

At the same time, in comparison with its initial edition, excluded chapter about "digital money" from the bill (cryptocurrencies). Pavel Krasheninnikov reminded that in 2018 when the bill was entered, "the thing was rather untwisted". Krasheninnikov still considers that cryptocurrencies in a row a case can be objects of inheritance of competitive and bankrupt weight, but in the conditions of lack of universal regulations was decided not to state the matter in the Civil Code.

The head of the Russian Association of the Cryptoindustry and Blockchain (RACB) Yury Pripachkin considers that the bills considered by the State Duma on this subject do not solve a problem of preparation of the complex legislation within which all set of the business relations which are already occurring between participants of the cryptocurrency market would be described.

«
"The amendments adopted to group of companies do not contain determinations of digital money of smart contracts – key concepts for cryptoeconomy. Existence of the concepts which settled in the market and used in the international business relations is a necessary condition of development of the cryptoindustry of our country. For lack of such determinations participants of the decentralized market will not be able effectively to work within the Russian jurisdiction and will be forced to build the business in other countries".

Yury Pripachkin
»

Russian Armed Forces recognized cryptocurrency one of means of money muling

On February 26, 2019 it became known that the Supreme Court entered the concept "cryptocurrency" to the resolution po to cases of laundering of criminal income.

The plenum specified that Articles 174 and 174.1. UK about money laundering should extend also to cryptocurrency. The money transformed from the virtual assets (cryptocurrency) purchased as a result of crime commission", said in an update of the resolution of a plenum of AF can act as a subject of crimes including ".

As it is specified in the solution of a plenum, changes are entered in connection with the recommendations of FATF (Financial Action Task Force, the international Group of development of financial measures for anti-money laundering).

From March 11 to March 29 Russia will be visited by the mission of FATF which should estimate efficiency of fight against laundering of illegally gained income and technical compliance of the country to 40 recommendations of this organization. Based on the previous assessment of 2008 experts of FATF revealed a number of shortcomings (including inadequate transparency of information on beneficial owners) that entailed setting of Russia on regular monitoring. ​ In September, 2014 the country was removed from the procedure of regular monitoring to the following mutual assessment.

According to materials of Rosfinmonitoring to the project of Mutual risks assessment of laundering of criminal income in Russia for FATF, inspectors of the international organization requested the Russian side about whether the concept "property" for the purpose of laundering of income virtual assets includes and if yes, that to what category they belong — "money" or "other property".

In the answer Rosfinmonitoring reported that the lack of legislative regulation and state supervision of release and address of virtual currencies is considered among the main vulnerabilities of the Russian economy. According to financial investigation, in recent years "use of cryptocurrencies for the purpose of sale of drugs and the subsequent laundering of criminal income is noted".

For February, 2019 in Russia "legal status of virtual assets is not defined", said in the document. At the same time in law enforcement agencies there is a practice of identification, the documentation and investigation of the crimes provided by Article 174.1 UK, made using cryptoassets when calculating for drugs. According to intelligence agency, investigators of police for 2017-2018 investigated 104 criminal cases (27 in 2017, 77 — in the 2018th). From them 51 case are ended and taken to court (in the 2017th — the 17, 2018 — 34).

Rosfinmonitoring gave investigation of Management on control of drug trafficking of the Ministry of Internal Affairs in Chuvashia as an example. Police officers managed to reveal organized criminal group which during the period from June to November, 2015 traded in drugs of synthetic origin by "a contactless method" — through Daffy Duck online store. Clients of drug dealers paid goods using an electronic payment system with the subsequent converting in cryptocurrency bitcoin through the Exmo.com exchange. Further money was withdrawn on the checking accounts opened on figureheads for the purpose of cashing in.

Upon crime criminal cases, including according to the Paragraph "and" of Part 4 of Article 174.1 UK were brought, and in April, 2017 the court verdict according to which members of grouping were sentenced to imprisonment on set from six to 13 years is pronounced. Directly for money laundering — two years of imprisonment.

In other unnamed region police officers during maintenance of criminal case about drug traffic in especially large size (Part 4 of Article 228.1 of UK) established that from February to March, 2017 the defendant as a payment for drugs accepted payments in cryptocurrency bitcoin which then transferred to the bank account. Thus the man legalized 281 thousand rubles received from drug trafficking. To it charge according to Part 1 of Article 174.1 was also brought to UK, and in August, 2017 the sentence according to which sentence in the form of 11 years of imprisonment is imposed (according to Article 174.1 UK are two years) is pronounced.

«
For February, 2019 in connection with commission of crimes using cryptocurrencies, despite not determination of their legal status in the legislation of Russia, in fact they are actually equated to property (according to the purposes of use of cryptocurrencies) and identified in a cash equivalent.
FATF Rosfinmonitoring
»

It is about improvement of practice of application of the legislation on counteraction of money laundering according to the existing realities, the head of commercial practice of BMS Law Firm law company Denis Frolov explained.

«
The position stated to AF of Russia — an appeal to formation of uniform practice on such affairs. (Out of criminal cases) it hardly somehow will influence normal use of cryptocurrencies. If there is a money muling due to use of cryptocurrency, then it is logical that these actions should fall under action of Article 174.1 of UK. And law enforcement agencies already apply this article in cases of use of cryptocurrency to laundering of criminal income.
Denis Frolov, head of commercial practice of BMS Law Firm law company
»

According to the lawyer, does not matter how there is a money laundering — investment into business, into the real estate, creation of movies and so forth.

Technically it is impossible to withdraw bitcoin or other cryptocurrency within criminal case, but the investigator can withdraw the "computer, the server, a piece of paper" containing the password for an input in a cryptopurse, the member of expert advice on digital economy and blockchain technologies in the State Duma, the founder of club of heads of security services "RANGE" Maxim Melnichuk specifies.

«
Presence of the main structures of articles of the Criminal Code is more important for initiation of legal proceedings (174.1, 159, 228, etc.), the cryptocurrency supplements the main article about legalization of income, fraud, sale of drugs, but is not a basis for criminal prosecution. During detention of the drug dealer to it impute Article 228 to UK even if he sells for a crypt — article anyway for sale of narcotic substances; as well at detection of funds withdrawal proceedings are initiated according to Article 174 by UK, and a method — through purchase of bitcoins.
Maxim Melnichuk
»

Melnichuk also reminded that two bills of turnover of digital assets ("About making changes in Part 1, 2 and 4 of the Civil code" and "About digital financial assets") which try to regulate turnover of cryptocurrencies are introduced to the State Duma.

«
But they underwent criticism from all directions as the concept of cryptocurrency is up to the end not defined - it is definitely not means of payment in the territory of Russia ​, and rather digital asset. Also legal status of participants of the market of such assets, volume of their rights and duties, as well as responsibility for non-compliance with future law is not defined.
Maxim Melnichuk
»

The resolution of the Supreme Court, most likely, will have an insignificant impact on volumes of cryptocurrencies in the Russian economy, the analyst of group of sovereign ratings and forecasting of AKRA Anna Mikhaylova considers.

«
The more than a cryptocurrency is regulated and appears in different white papers, the quicker it will become a use subject for broad masses. The law on its legal regulation will not be adopted yet, it is difficult to speak about wide circulation.
Bulat Kaliyev, head blockchain laboratory of Deloitte
»

Mikhail Zhuzhzhalov, the lawyer of Deloitte Legal in the CIS, considers that the effect of the solution of a plenum of AF will be rather positive, than negative.

«
The document published on the website of Russian Armed Forces allows to consider that AF is just going to recognize cryptocurrency property which turnover is not limited and is not prohibited. In particular, if the cryptocurrency was recognized prohibited to circulation, it would be mentioned in other provision of the resolution according to which Article 174, 174.1 UK affect the order by the money received from conversion of the property limited in turnover. In the next explanations it is specified that the cryptocurrency can be recognized as the property purchased as a result of crime, but not the property limited in turnover.
Mikhail Zhuzhzhalov, the lawyer of Deloitte Legal in the CIS
»

Changes are possible in the medium term. Digital money, more probably, is used for unauthorized transfer of means abroad and the persons doing shadow or half-shade business, Mikhaylova says. For these persons in the short term there are possibilities of cash converting of cryptocurrencies or use for this purpose of the international exchanges and the shadow Internet, and in this plan hardly something will change, she believes.

The Bank of Russia paid attention that cryptocurrencies are used in gray retail. In the summer the regulator called the Russian markets — Shopping Center Moscow (Lyublino), shopping Mall Sadovod (in the southeast of the capital, at MKAD) and Fud City (Kaluzhskoye Highway, New Moscow) — "pioneers and leaders in the offer on purchase of cryptocurrencies". According to the director of the department of financial monitoring and currency exchange control of the Central Bank Yury Polupanov, in such markets on a considerable part of revenue the cryptocurrency which is not considered and goes via e-mail home anywhere of dealers and producers where it is converted into local currency is purchased.

The market value of cryptocurrency which is at Russians as of the first quarter 2018, was from $7.5 billion to $14 billion (from 500 billion to about 900 billion rubles), it was told in a research of the Russian ACRA rating agency. At the same time the share of those who invested in cryptocurrency for the purpose of portfolio diversification as in an alternative investment asset or because of the increased popularity of cryptocurrencies is extremely small, Mikhaylova says.

Low attractiveness of cryptocurrency for investments is connected with the fact that it does not execute any of functions of money as it is characterized by the increased volatility (by calculations of the agency, the index of annual volatility of bitcoin is equal to 92%). The digital currency cannot save the cost in time, has no providing in the form of a real asset and has no warranty of the demand and value in the future — not each country recognizes cryptocurrency as means of payment, it was told in the report of AKRA[7]. ​

2018

Cryptocurrencies left the bill of digital assets

On September 19, 2018 it became known what does not contain the concept "cryptocurrency" in the latest version of the bill "About Digital Financial Assets" (TsFA), and mining is defined only as release of tokens for the investment attraction in the capital. The bill does not regulate the transaction with cryptocurrencies, the chief executive of Sputnik DLT Artem Tolkachyov who was involved to discussion of the bill as an expert from the industry explained. Now transactions with tokens became a subject of regulation only. The last can or confirm the rights to property and equity participation of the company, or to execute a technical role upon purchase and the address of digital assets.

The latest version of the document does not answer a question when cryptocurrencies in Russia are legalized. The state tries to level the risks connected with cryptocurrencies, but because of it leaves to the market the minimum opportunities for development. It calls into question into transfer of cryptobusiness to Russia and its legalization here, the expert emphasized.

The Russian and foreign companies and individuals registered as individual entrepreneurs can release tokens. For this purpose it is necessary to prepare the special decision on issue. It is important that the release of tokens should be provided with property of the issuer or the third parties, said in the bill.

Placement of TsFA will take place on special platforms which should obtain the license of the prof participant of the securities market and be included in the special register of the Central Bank. Such exchange is obliged to identify and keep the customer accounting. Also it should provide access to these data on a request of state agencies or the receiver.

The operator will be separately determined by exchange of digital assets, responsible for transactions on purchase and sale. TsFA will be permitted to exchange for rubles, foreign currency or other tokens [8].

Will extend regulations of the Tax Code to cryptominers

Will extend existing rules of the Tax Code to miners and owners of cryptocurrencies. The PIT will be levied from the individual which is engaged in turnover of digital money, taxation of legal persons will correspond to a business form, Izvestia with reference to the head of the State Duma Financial Market Committee Anatoly Aksakov reports in July.

According to him, the bill of digital financial assets (cryptocurrencies) is going to be adopted in the autumn session of the State Duma. He specified that in  the document the separate tax modes for owners of digital money will not be described, i.e.  all approaches operating in the Tax Code will be applied to mining and turnover of cryptocurrencies.

At the same time the head of the State Duma Committee on financial markets assumed that separate tax regimes for mining and turnover of cryptocurrencies can appear in the future if in the government express an initiative to create them.

"If you want to describe separately for these types of business, then will write. While we do not describe tax questions in any way", – he added.

The State Duma of Russia adopted the law "About Digital Financial Assets"

The State Duma of Russia adopted the law "About Digital Financial Assets" which enters such concepts as cryptocurrency, mining, a token, the smart contract, the procedure of release of tokens. The law assumes that cryptocurrencies will not be a legal tender currency in the territory of Russia[9].

By analogy with the similar law in Belarus, it is possible to exchange tokens for rubles only through special operators. It is about creation of the special cryptoexchanges. At the same time tokens and cryptocurrencies will be considered in Russia as property.

Production of cryptocurrencies becomes business activity.

Standards on acquisition of cryptocurrencies by people, not experts, will be set by the Bank of Russia.

The arbitration Court of Appeal in Russia recognized cryptocurrency property

The ninth arbitration Court of Appeal in Moscow recognized cryptocurrency property. Earlier the cryptocurrency was considered as court as a symbol set and was not subject to transfer. In court's decision it is noted that the cryptocurrency is not considered legal means of payment[10].

"At the time of this court session, the cryptocurrency money as such is or it is a monetary substitute, it is necessary to consider cryptocurrency – property, fiducial (fiat) money, electronic money, currency, a financial instrument or securities, the concept and the legal nature of cryptocurrency of the legislation of the Russian Federation is not defined, corresponding changes should be made to the legislation till July 1, 2018", the document says.
"At the same time, carrying out by the Russian citizens and the organizations of transactions with use of cryptocurrency are not prohibited by laws of Russia. However, the basic line distinguishing cryptomoney from money as such is the method of their emergence in digital space. So, real means of payment are required to be deposited to a certain account or the e-wallet in the beginning, and cryptocurrency units appear already in electronic form", said in court's decision.

At the same time the court decided a fate cryptocurrency as property of the debtor and to transfer her to debt repayment. This Russia's first decision of judicial authority which, in fact, legalizes use of cryptocurrency.

Bill of introduction of the concepts "digital right" and "digital money"

As it became known at the end of March, 2018, the federal law draft "About Making Changes in Parts the First, Second and Fourth Civil Code of the Russian Federation" creating a basis for regulation of legal relationship within digital economy is introduced to the State Duma.

In general the bill is designed to enshrine in the Civil code several basic provisions which will allow to regulate the market of new objects of the economic relations ("tokens", "cryptocurrency" and so forth), to provide legal conditions for commission and execution of transactions in a digital medium ("smart contracts", the "self-performed" transactions, etc.) and to provide protection to citizens and legal entities according to such transactions. Read more here.

Bill of cryptocurrencies

In March, 2018 the bill "About Digital Financial Assets" regulating the status and use of cryptocurrencies in Russia is introduced to the State Duma. It is possible to study the document on the website of the Automated system of ensuring legislative activity. The bill was entered by group of parliamentarians under the leadership of Anatoly Aksakov, heads of the State Duma Financial Market Committee[11].

The bill assigns the status of digital financial assets to cryptocurrencies and tokens, at the same time refusing to them the status of legal means of payment. It is possible to exchange digital assets for rubles or foreign currency. Only special operators will be able to perform such transactions — the legal entities having powers to perform the types of activity listed in the laws "About Security Market" and "About Organized Trading Sessions".

Operations with cryptocurrencies will be performed using digital records and digital transactions — these concepts are also entered by the bill, as well as concepts of the register of digital transactions and the distributed register of digital transactions. Access to the distributed register can be provided through a digital purse which opens the operator.

The purse opens only after the operator carries out identification of its owner to exclude money muling cases. Also the concept of the validator — the person which is engaged in confirmation of authenticity of entries in the distributed register, i.e. their validation is entered.

Besides, the bill enters into use a concept of mining — activities for consciousness of cryptocurrency or receiving it as remuneration. "Mining is recognized as business activity in case the person which performs it within three months in a row exceeds the energy consumption limits set by the Government of the Russian Federation" — the bill says.

Sale of tokens

Distinguishing of cryptocurrencies and tokens is carried out by the number of issuers: tokens are issued one company, the cryptocurrency is mined by a great number of miners. During a primary offer (ICO) tokens can be purchased not only the qualified investors, but also normal citizens. The Central Bank should define a maximum amount on which they can be purchased per customer, it is not stated in the bill.

The bill sets an order of carrying out a primary offer of tokens. The issuer should issue the public offer and an investment memorandum where data on the company and conditions of the offer of tokens will be reflected. For the purpose of counteraction to money muling by means of ICO, the public offer should include data on the beneficial owner of the issuer.

The transactions with tokens performed during ICO are fixed using smart contracts. Smart contracts are recognized in the bill as a legal agreement type which consists electronically and is executed using digital technologies.

The Ministry of Finance submitted the updated bill "About Digital Financial Assets"

In January, 2018 the Ministry of Finance provided upgraded version of the bill "About Digital Financial Assets". The concepts connected with financial side of implementation of blockchain technology (the kritovalyut, a token, mining and so forth) will receive legally significant determinations in Russia.

These assets, directly to which the cryptocurrency and tokens concerns, in the document are described as the property electronically created using cryptographic (cryptographic) tools. The property rights to them make sure by entering of records into the register of digital transactions. "Digital financial assets are not a legal tender currency in the territory of the Russian Federation" — it is emphasized in the bill.

As envisioned by the Ministry of Finance, the cryptocurrency and tokens in our country can be changed for money or other digital assets only. Without restrictions only specialized legal persons corresponding to the federal laws "About Security Market" and "About Organized Trading Sessions" will be able to perform such exchange.

Individuals (unskilled investors) will be able independently to purchase within one release tokens for the amount no more than 50 thousand rubles. It will be allowed to make it by it only by transfer of tokens into the special account tied to the e-wallet of the legal operator (the above-mentioned specialized legal person).

In general the law preparing for an exit is designed to govern the relations arising during creation, release, storage and the address of digital financial assets and also implementation of the rights and obligation fulfillment under smart contracts.

On a bill letter, mining (creation of cryptocurrency) will begin to be considered as business activity. The smart contract is defined as the agreement electronically, "execution of the rights and obligations for which is performed by commission in an automatic order of digital transactions in the distributed register of digital transactions in the sequence which is strictly determined by it and at approach of the circumstances determined by it".

Operators will be able to open digital purses only after passing of identification procedures according to the federal law "About Counteraction of Legalization (Washing) of Income Gained in the Criminal Way and to Terrorism Financing".

The procedure of release of tokens for the law will have to consist of specific stages: publications the issuer on the Internet of the offer, an investment memorandum and other documents, signing of the contracts, including in the form of the smart contract, directed to alienation and payment of tokens by their acquirers.

The mentioned public offer about release of tokens should contain the information about the issuer and his beneficiary (beneficiary) — full name, the location of permanent executive body, the official site in the Internet.

Similar regulations are established and for so-called validators — the legal entities and physical persons which are participants of the register of digital transactions and performing activities for validation of digital entries in the register of digital transactions[12].

The head of the government of Russia assumed that cryptocurrencies the deadlock project

In January, 2018 the head of the government of Russia Dmitry Medvedev did not exclude that the boom on cryptocurrencies will pass and they will disappear.

"All are concerned today by a question of where a limit of a cryptocurrency race. In general, can be, it is a deadlock branch of cyber-revolution. It is impossible to exclude completely that the scenario which happened in the early nineties when there was a set of the companies based on the developing Internet will not repeat, and at the beginning of the 2000th these companies substantially disappeared. But technology, I mean the Internet, it not only remained, but plays in our life a key role now. In the same way in several years also cryptocurrencies can disappear", – the Deputy Prime Minister told[13].

2017

The Ministry of Finance and the Central Bank of the Russian Federation submitted the first version of the bill of regulation of cryptocurrencies

The Ministry of Finance of the Russian Federation and the Central Bank of the Russian Federation at a meeting of Public council at the Ministry of Finance submitted on December 28, 2017 the bill of legal regulation of use of digital technologies in the financial sphere.

As the Deputy Minister of Finance Alexey Moiseyev noted:

«
We had to avoid temptation to adjust turnover of digital assets and attraction of financial resources using digital assets as we regulate financial markets. In my opinion, emergence of all these digital assets is an answer of world economy to excessive in some parts or anyway very heavy regulation of financial markets.
»

According to him, regulation "has very easy temper", basic and minimum necessary.

In the Ministry of Finance of the Russian Federation the meeting of Public council about legal regulation of use of digital technologies in the financial sphere took place
In the Ministry of Finance of the Russian Federation the meeting of Public council about legal regulation of use of digital technologies in the financial sphere took place

The provided bill generally concerns ICO, and rules of turnover of cryptocurrencies will be discussed later. The Russian President Vladimir Putin charged to prepare a final version of the bill of regulation of cryptocurrencies in the first half of the year 2018.

«
We separated concepts of cryptocurrencies and tokens as tokens and ICO comprise the idea of investment. Our task as the states — to make an investment order legally transparent and protected for investors. We further with the Ministry of Finance want to specify the rights and duties that the company which performed ICO bore responsibility to investors from whom it takes money — the first deputy chairman of the Bank of Russia Olga Skorobogatova told about plans.
»

According to her, first of all, authors set the task to enter if not all, then the most part of concepts that it was possible to be guided somehow in a difficult subject, operating with the concepts fixed in law. Also several lines were devoted to mining, having suggested to define it as business activity and, as a result, to tax it, regardless of amounts of production of cryptocurrencies.

However the final solution on it and some other questions will be accepted by the Federal Tax Service.[14]

The Ministry of Finance advises not to contact cryptocurrency

Such opinion was expressed by the Minister of Finance of the Russian Federation Anton Siluanov, commenting on perspectives of the adoption of law regulating the market of cryptocurrency in the country. "It is better not to communicate", – the minister answered an appropriate question concerning transactions of the population with cryptocurrencies, the TASS agency quotes the minister.

The fact that the department headed by Anton Siluanov drafted the relevant bill became known from an interview of the Minister of Finance to Russia-24 TV channel.

The law will define an order of release, taxation, purchase and address of cryptocurrencies, Anton Siluanov told. He also emphasized that the essence of the law consists also in that: "Only professional participants of the market, but not ordinary citizens worked with cryptocurrencies".

The minister explained it with the fact that the digital currencies existing in the country have more speculative character, so, at the ordinary citizen the probability to get on deception[15] is high[16].

"Concern of the financial authorities is explainable especially as the president already gave assignment to adjust cryptocurrencies, – the analyst of IK of BKS Dmitry Alexandrov told "Invest-Forsaytu". – The main thing that adoption of law was not shelved and cryptocurrencies received though some status that it was possible to control them".

The Russian Federation can impose criminal liability for cryptocurrency mining especially for calculations

The Deputy Minister of Finance Alexey Moiseyev declared a possibility of introduction of criminal liability for creation of cryptocurrencies especially for carrying out calculations. This measure can be provided in the preparing law on cryptocurrencies, Interfax reports in December, 2017.

The deputy minister reminded that in Russia there is now the constitutional principle according to which all calculations should take place in rubles. For violation of this principle there is no punishment now, however the government is going to register in more detail its implementation and punishments for its non-compliance, Moiseyev explained.

"Punishments will be different, generally administrative, but if someone specially organized cryptocurrency for the purpose of some calculations, there will be criminal sanction", - marked out the deputy minister. In addition to criminal liability for release of cryptocurrency in a large size especially for calculations, punishments for creation of a financial pyramid or issue of cryptocurrency for substitution of ruble for the purpose of non-payment of taxes are also prescribed.

Bank of Russia: growth of a rate of cryptocurrencies bears risks for world economy

The increased popularity of cryptocurrencies can lead to large-scale losses of users. Such concerns were sounded by the Central Bank of Russia.

In the "Overview of financial stability" published by the Central Bank it is noted that "formation of a bubble in the market of cryptocurrencies bears risks for global economy". In the document it is said: "The high activity in the market of cryptocurrencies, including bitcoin can become one of risk sources in the future. Use of cryptocurrencies becomes more and more large-scale. In particular, the number of transactions with bitcoins gradually increases, the rate of bitcoin promptly grows when preserving very high volatility".

The Central Bank pays attention that the present situation with bitcoin can cause considerable losses of consumers. Also financiers consider that cryptocurrencies can be used as for the purpose of money muling, and terrorism financing.

Russians are obliged to pay a tax on bitcoins

The Ministry of Finance of the Russian Federation confirmed that operations on purchase and sale of bitcoin tax with the income tax (PIT) in just the same order as any other transactions from which this tax is paid. The ministry refers to the fact that Chapter 23 of the Tax Code of Russia "Income tax" does not set any special taxation for cryptocurrency income, so, the general rule extends to them[17].

The statement contains in written explanation which the Ministry of Finance directed on October 13, 2017 to the Consultant Plus company developing the help system of the same name in response to the corresponding request. Let's remind, according to Article 34.2 of the Tax Code the ministry makes to taxpayers written explanations concerning application of the Russian tax law. Explanations were made by Department of taxes and customs policy.

The Ministry of Finance also reminded that according to Article 41 of the Tax Code the taxable income is the any economic benefit received in a monetary or natural form and which is subject to assessment. As it is set by Subparagraph 1 of point 1 and points 2 and 3 of Article 228 of the Tax Code if the individual under the agreement earned a reward from other individual, then it calculates the amount of tax and pays this amount as it should be, stipulated in Clause 225 Tax Codes. Payment of a tax is fixed in the tax declaration which moves in tax authority in the place of accounting.

Russia legalizes cryptocurrencies by July 1, 2018

According to the orders of the President Russia Vladimir Putin approved according to the results of the meeting on digital technologies in the financial sphere which took place on October 10, 2017 concepts of such phenomena as the distributed register, the digital letter of credit, the digital mortgage, a token, the smart contract will be enshrined in the Russian legislation cryptocurrency. At the same time concepts will be formulated taking into account that the ruble is the only legal means of payment in the Russian Federation.

Picture: promdevelop.ru
Picture: promdevelop.ru

At the same time, requirements to the organization and implementation of production of cryptocurrency (mining), registration of economic entities and an order of taxation of income gained from mining will be developed. Besides, the system of regulation of ICO (Initial Coin Offering), or "public attraction of money and cryptocurrencies by placement of tokens" — by analogy with regulation of primary securities placement will be created.

The Bank of Russia and the Government of the Russian Federation will be engaged in execution of instructions. The term of their execution is determined till July 1, 2018.[18]

Minister of Communications Nikiforov: "We will start cryptoruble"

The Minister of Telecom and Mass Communications of the Russian Federation Nikolai Nikiforov said on October 16 that Russia  will release own cryptocurrency — such decision was made by the Russian President.

"I so surely say that we will start cryptoruble, for one simple reason: if we do not make it, then in two months it will be made by our neighbors in EurAsEC", – the minister noted.

He emphasized that for effective work of domestic cryptocurrency it will be necessary to arrange payment of the PIT.

The Ministry of Finance and the Central Bank until the end of 2017 will prepare the bill on regulation of cryptocurrencies

The state intends "head and adjust" process of issue and the address of cryptocurrencies — about such decision made on October 10, 2017 at a meeting with the President Russia Vladimir Putin, To Interfax Minfina the Russian President reported Anton Siluanov.[19]

In addition to the Minister of Finance, the Assistant to the President Andrey Belousov, the chairman of the Central bank Elvira Nabiullina and the deputy head of the Central Bank Olga Skorobogatova, the CEO of Qiwi company Sergey Solonin participated in a meeting.

Vladimir Putin held a meeting on use of digital technologies in the financial sphere and implementations of the innovation financial instruments
Vladimir Putin held a meeting on use of digital technologies in the financial sphere and implementations of the innovation financial instruments
«
The president sounded yesterday those problems which are connected with cryptocurrency. It and difficulties with regulation of the "anti-money laundering" legislation, and different cases connected with difficulties of identification. Therefore agreed about the following: that the state needs to perform regulation of process of issue of cryptocurrencies, process of mining, process of the address — specified minstr.
»

According to Anton Siluanov, the Ministry of Finance and the Central Bank intend to decide until the end of 2017 on key basic positions on regulation of cryptocurrencies and to prepare the frame bill which will be improved and specified afterwards.[20]

On a question of journalists of what body will be directly engaged in regulation of cryptocurrencies, Siluanov did not give the specific answer, having specified that in this sphere of responsibility there are "subjects both for the Central Bank, and for the Ministry of Finance, and for Rosfinmonitoring".

The State Duma ordered a research of the market of cryptocurrencies and ICO

As it became known on September 22, 2017 the State Duma announced an open competition on carrying out an expert and analytical research on the subject "Legislative Regulation of Implementation and Practical Application of Modern Financial Technologies". The cost of services in the contract is determined in the amount of 2.49 million rubles.[21]

The State Duma investigates the market of cryptocurrencies for 2.5 million rubles. Photo: tvc.ru
The State Duma investigates the market of cryptocurrencies for 2.5 million rubles. Photo: tvc.ru

The winner should carry out the analysis of the cryptocurrencies which are released on the basis of a blockchain and use of the ICO tool (Initial Coin Offering) as alternative channel of the investment attraction and following the results to create the offer on counteraction at the legislative level to risks and threats which these technologies can potentially represent. It is, in particular, about possibilities of financing of terrorism and receiving illegal income.

According to the tender documentation, results of an expert and analytical research will form a basis for preparation of a packet of legislative initiatives on integration into the Russian market of perspective financial technologies. As it is specified in purchasing documents, the analysis of the latest financial technologies is necessary that "as a result of tough regulation not to destroy distribution of perspective financial technologies, to avoid emergence on their basis of the bubbles capable to compromise them". Among research purposes protection of consumer interests of financial services is also called.

As of September 22, 2017, order taking from potential contractors of the contract is conducted.

The head of the Central Bank Elvira Nabiullina against legitimation of cryptocurrencies

At a meeting of the President of Russia Vladimir Putin with businessmen in the Kremlin on September 21, 2017 one of its participants suggested to legalize cryptocurrency, however the chairman of the Central Bank (Central Bank) Elvira Nabiullina performed with objections against this idea[22].

"There was an offer cryptocurrency to legalize at one of entrepreneurs. But Elvira Sakhipzadovna told that the Central Bank against it because it is actually loss by the state of control over cash flows from abroad" — the head of the all-Russian public organization of a small and medium entrepreneurship Support of Russia Alexander Kalinin told Interfax.
"She told that the Central Bank against to go on the Japanese way (in Japan in 2017 the law on cryptocurrency was adopted, it is recognized official settlement means, specifies the edition), to make actually the exchange. For those reasons that we will not trace channels. Who will use this channel? For what purposes?" — Kalinin quoted the head of the Central Bank.

Kalinin did not specify who exactly brought up a question of legalization of cryptocurrencies. In total several dozens of businessmen, including from banking sector participated in a meeting with Putin on Thursday. At an action there were heads of Rosneft, AFK "Sistema", Alfa-Bank, Gazprombank, Lukoil, the Russian Railway, "Yandex", VEB, Sberbank, Mechel, VTB, NLMK, Severstal, Aeroflot, OSK, etc.

REU of G.V. Plekhanov will be engaged in the rating of the market of cryptocurrencies

On September 11, 2017 it became known that in Plekhanov Russian Academy of Economics the Board of trustees of the University creates rating agency for carrying out independent analytical researches and assessment a blockchain startups, ICO cryptocurrencies and also the analysis of development of the cryptocurrency markets and blockchain technologies.

Quickly growing a blockchain industry it is limited to lack of standardization and the developed standards of assessment and application of opportunities of this technology. There are no professional infrastructures for systematic assessment and data analysis on projects a blockchain. The analysis of technical feature of the platform, business models, commands and many other factors will allow to estimate objectively risks and economic value of an investee, consider at the university.

«
The blockchain will inevitably lead to digital transformation of infrastructure in many traditional fields of business. It creates business models which could not exist in the market a few years ago. They create considerable opportunities for investors and owners of the business enterprises. But any new fast-growing market bears in itself substantial risks for all participants due to the lack of standards of quality evaluation, reliability and transparency of new projects — Nadezhda Surova, the director of Institute of management of REU of G.V. Plekhanov, the head of educational programs for a blockchain and cryptocurrencies emphasized. — Therefore creation on the platform of the economic university of specialized rating agency, largest in Russia, is a right decision for developments of standards of assessment a blockchain startups, creations of professional ratings of ICO. After emergence of rating agency fraud risks will be minimized as for issuers, and investors, and they will obtain more objective information for decision making.
»

The community of users of the market of cryptocurrencies and blockchain technologies created in Plekhanov Russian Academy of Economics together with Board of trustees of the university integrating scientific elite of the university, the faculty and students of profile departments and faculties, specialists of banks, representatives and heads large the company and the state corporations became a basis of rating agency.

«
The analytical command consists of the leading professionals in the investment industry with wealth of experience in Internet business, crowd funding and a blockchain industry — the head of Community of users of the market of cryptocurrencies and a blockchain of technologies, the chief executive of Board of trustees of REU of G.V. Plekhanov Sergey Bezdelov said. — We attract our colleagues from Rostec Group, Rosatom State Corporation to gather a team of the best analysts of the market a blockchain. Our purpose — to help the market of cryptocurrencies to reach the necessary quality standards, transparency and reliability in the shortest possible time that will help to attract institutional investors and will create great opportunities for entrepreneurs of new economy in attraction of financing for implementation of the projects.
»

«
Nearly an every week we begin training in different educational programs in the field of blockchain technologies and cryptocurrencies — the Doctor of Economics, professor of REU of G.V. Plekhanov, the area director of Rating agency Artur Kudelya emphasized. — We integrate and we consolidate professional community in the direction of development of digital economy: so, with assistance of university 16 till November 19 in Sochi based on Rosa Khutor within the Festival of innovations and BAZAAR Tech Convention technologies over 2 thousand participants and from them 800 developers will be going to ICO BAZAAR where the best will be provided for assessment and an output to ICO a blockchain projects of Russia.
»

Zecurion will develop standards of security of cryptocurrencies

The Zecurion company, the Russian developer of DLP systems for data protection from leak, headed the working group on blockchain technologies and cryptocurrencies within Committee on information security of ARPP "Domestic Software". In Zecurion said it on August 30, 2017.

The working group on blockchain technologies and cryptocurrencies is created for development of standards and practical recommendations about safe use of technologies. In addition to a blockchain, participants of Committee created the working groups and on other directions, including cloud computing and information warehouses, Internet of Things (IoT), an APCS.

According to the statement of the first Deputy Prime Minister Igor Shuvalov, technology of a blockchain will develop. He specified that he sees in them possibilities of providing high-quality and transparent public services.

«
For Zecurion the solution to head the working group on a blockchain — a responsible step. We became interested in a subject of cryptocurrencies even at the time of their origin therefore we could save up necessary competences for coordination of work of this direction — Alexander Kovalyov, the deputy CEO of Zecurion, the expert in cryptocurrencies said. — At the state level support both a blockchain, and cryptocurrencies, so, this sphere should be protected. Our position — not to follow trends, and to create them for this reason we actively work in this area.
»

The Ministry of Finance suggested to prohibit sale of cryptocurrency to individuals

According to the Ministry of Finance of the Russian Federation, the cryptocurrency should be regulated as other property and to be classified as a financial asset. At the same time department considers it necessary to impose a ban on sale of bitcoins to individuals and to allow only the qualified investors to carry out transactions with cryptocurrency at the exchange. It was said on August 28, 2017 by the Deputy Minister of Finance Alexey Moiseyev in an interview to Russia-24 TV channel.[23]

As he explained, such approach is intended to provide protection of the rights of buyers and sellers, and the Ministry of Finance already discusses a possibility of its implementation with the Central Bank and the Moscow Exchange.

Ministry of Finance: the cryptocurrency should be classified as a financial asset and to be on sale through the exchange. Photo: DPA/Jens Kalaene
Ministry of Finance: the cryptocurrency should be classified as a financial asset and to be on sale through the exchange. Photo: DPA/Jens Kalaene
«
There is a point of view that such cryptocurrencies as bitcoin are a financial pyramid. It is heavy to argue with this point of view. Investments such are high risk. It also defines our approach to their regulation — Moiseyev explained.
»

For benefit of the offered approach of the deputy minister also gave the fact of increase of cases of use of cryptocurrencies for illegal operations in Western Europe and Russia as an argument.

«
It is connected with the fact that mechanisms of fight against laundering of the capitals are not up to the end applicable to cryptocurrencies now. It is the second task why through the exchange. That the regulator on behalf of Rosfinmonitoring always knew who sells and who buys these bitcoins. Because now there are precedents when money is laundered through purchase sale of bitcoins. It needs to be excluded" — he emphasized.
»

The Moscow Exchange creates the platform of post-trading service of cryptoassets

The Moscow Exchange works on creation of infrastructure for biddings by cryptocurrencies, RNS in the press service of marketplace stated on August 28, 2017.[24]

Moscow Exchange. Photo: ponedelnikmag.com
Moscow Exchange. Photo: ponedelnikmag.com

As the representative of the exchange explained, development of the platform of post-trading service of cryptoassets is conducted. At the same time Moscow Exchange together with bidders studies the interest of investors in transactions with digital assets — the marketplace is ready to give an opportunity to conduct biddings by financial products which are in demand and at the same time provide sufficient legal protection.

In parallel the exchange conducts dialogue with regulators for refining of all legal issues of the organization of biddings by cryptoassets in the Russian stock exchange market and ensuring protection of interests of acquirers of such assets.

«
On the exchange platform trade in both cryptocurrencies, and derivatives on them and also the stock trading of exchange-traded funds on cryptocurrencies (ETF) is possible. From the regulatory and technical points of view quicker and easier to implement a possibility of trade in derivatives on cryptocurrency — the representative of marketplace summed up the result.
»

The Ministry of Finance will not grant the license for work with cryptocurrencies

The Ministry of Finance of the Russian Federation stated in April, 2017 that for transactions with cryptocurrencies special licenses will not be granted. Work with bitcoin will be regulated on the basis of a license for activities of broker services which also banking institutions have.

Alexey Moiseyev, the Deputy Minister of Finance of the Russian Federation, notes that there is krayeugolno a question to counteraction of money muling and consumer protection. With respect thereto department will prepare a number of offers for the government.

It is expected that the government legislatively legalizes bitcoin and other cryptocurrencies that it was possible to perform officially operations on their purchase and sale, including in banks[25].

The Central Bank suggested to consider bitcoins digital goods

In April, 2017 it became known of plans of Russian authorities to legalize cryptocurrencies. The Central Bank and profile departments think over what status they should receive, Vedomosti writes.

According to the Deputy Minister of Finance Alexey Moiseyev, in 2018 in Russia transactions with cryptocurrency, in particular, with bitcoins can be legalized. The government considers such possibility within fight against illegal money transfers, he noted.

In April, 2017 it became known of plans of Russian authorities to legalize cryptocurrencies
In April, 2017 it became known of plans of Russian authorities to legalize cryptocurrencies
«
In each timepoint the state should know who is on both parties of a financial chain. If there is a transaction, people who carry out it should understand from whom they buy and to whom sell, precisely as with banking activities — Alexey Moiseyev reported the Bloomberg agency.
»

By April, 2017 cryptocurrencies are banned in the Russian Federation. In March the prime minister Dmitry Medvedev charged to the Ministry of Economic Development and the Ministry of Telecom and Mass Communications to analyze a possibility of application of blockchain technology in the field of public administration and management of economy in Russia.

As the bank representative of Russia told Vedomosti, the regulator and profile departments develop a joint position concerning the status of cryptocurrencies then it is going to define approaches to their regulation.

According to the top manager of large national bank to whom the edition refers, the bitcoin would be suitable for calculations between physical persons or legal entities in any configuration, but at the same time it is necessary to remember the risks connected with volatility of its rate.

The vice president of department of currency transactions in foreign market of Alfa-Bank Oleg Legostev considers the most probable transactions purchase of cryptocurrency via the bank card further to pay in it on the Internet. Use of cryptocurrencies will reduce the commissions, he is sure.[26]

In May, 2017 it became known that the Bank of Russia suggests to identify cryptocurrencies as digital goods and to enter their taxation, the deputy chairman of the Central Bank Olga Skorobogatova on a performance in the State Duma said.

"As virtual money which is not provided with a gold stock are emitted and not controlled in terms of their quantity, sooner or later it can result in instability in financial markets" — Skorobogatova said, having noted that meanwhile the quantity of cryptocurrency in the market "is not tragic in general for the market" [27].

Skorobogatova specified that the Central Bank offers concerning the cryptocurrencies "apply the legislation with certain amendments regarding taxes, control and the reporting, as to digital goods" going in Russia. According to her, such offer was supported by the Ministry of Finance, the Ministry of Economic Development and "security agencies" with which the Central Bank held meetings. In a month the Central Bank will finish preparation of version of regulating documents in which it will be specified, in what documents it is necessary to enter new regulations.

FTS declared an official position the status of cryptocurrencies in Russia

The Federal Tax Service of the Russian Federation in the legal-reference system "Consultant Plus" published the letter in which the official position of the authorities about the status of cryptocurrencies in [28] is displayed.

The document contains the following theses:

1) Such concepts as a monetary substitute, cryptocurrency, a virtual currency are not enshrined in the legislation of the Russian Federation.

2) The legislation of the Russian Federation does not contain prohibition on carrying out by the Russian citizens and the organizations of transactions with use of cryptocurrency.

3) Use of cryptocurrencies at transactions is the basis for consideration of a question of reference of such transactions to transactions (transactions) directed to legalization (washing) of income gained in the criminal way and terrorism financing.

4) According to FTS, the transactions connected with acquisition or implementation of cryptocurrencies using currency values (foreign currency and external securities) and (or) currency of the Russian Federation are currency transactions.

5) The existing system of currency exchange control does not provide receiving currency exchange control by bodies from residents and nonresidents of information on transactions of purchase and sale of cryptocurrencies.

2016

Deputy of the State Duma Lugovoy: creation of optimal legal conditions for development of cryptocurrency - a pressing issue

On October 14, 2016 Andrey Lugovoy, the deputy of the State Duma of the Russian Federation and the vice-chairman of the State Duma Committee on Security and Anti-Corruption Activity, announced two possible forms of legislative designing in the field of cryptocurrency turnover.

According to the deputy, a pressing issue – creation of optimal legal conditions for development of cryptocurrency. The law, on the one hand, should not allow Russia "drop out" of the general trend of development of financial technologies and allow a capital outflow, with another – should exclude risks of use of a virtual currency for money laundering and financing of terrorism.

Andrey Lugovoy, (2014)
Andrey Lugovoy, (2014)

The State Duma considers two possible forms of legislative designing in the field of cryptocurrency turnover:

  • entering of separate changes into the current legislation. Noticeable completion will be demanded by the law on a payment system, the Tax Code, laws on the Central Bank of Russian Federation, on licensing of separate types of activity, etc. Implementation of this concept will entail, according to the deputy, need of gain of attention to establishment of zones of special control and financial monitoring.
  • development of the special law "About Bases of Regulation of Cryptocurrency" in which should find reflection: legislative determination of cryptocurrency and its main signs, subjects of the relations, the principles of regulation, a measure of counteraction to use of cryptocurrency in criminal objectives. It is for this purpose important to set availability of information on transactions to supervisory authorities, to license mining and to carry out accreditation of the organizations controlling processing, etc.

Having developed the uniform legislative concept of cryptocurrency, Russia can become the first country in the world which adopted the Law on cryptocurrency.

At the initiative of Andrey Lugovoy in April, 2016 on the platform of the State Duma the working group on cryptocurrency turnover risks assessment is created. It is the platform for increasing efforts of economists and lawyers on development of model of normative regulation of cryptocurrency.

But for implementation of the idea of preparation of the relevant law it is important to consider the interests of the leading players in the field of financial regulation and control:

  • The Central Bank is maintenance of financial stability and control of exchange platforms;
  • The Ministry of Finance is maintenance of financial stability;
  • Rosfinmonitoring is prevention of laundering of criminal income and financing of terrorism;
  • The banking sector – development of blockchain technology, interbank interaction, improvement of quality and speed of rendering banking services;
  • Business – community – mining and use of cryptocurrency within transnational cooperation.

Identification should become the first zone of control. Users, miners, shops, the exchanges, exchange points should be identified. In 2016 the Ministry of Finance of Spain obliged miners of cryptocurrency to be registered and pay taxes. Now their activity legally is considered economic. At the same time the cryptocurrency in Spain is considered means of payment, its sale is not taxed. Nevertheless, miners are obliged to reflect the activity in the tax declaration at payment of a tax on income on physical persons or legal entities.

The second zone: exchanges and exchange platforms. They should have the special license granted by the Central bank.

Cashing in of cryptocurrency should become the third zone of control. The recommendations of FATF (Financial Action Task Force, FATF) should extend to this transaction.

In Russia there will be no criminal sanction for turnover of cryptocurrencies

The Russian departments in general expressed against in the country criminal liability for use of bitcoins — electronic currency was imposed. Interfax was reported about it by the source close to the financial and economic block of the government[29].

As noted, the Ministry of Finance, the Central Bank and government office agreed with arguments of the State Office of Public Prosecutor and Ministry of Justice against introduction of such measure. It is expected that the report will be submitted to the Russian President on this subject in the government in August, 2016. So far it is only about monitoring of use of cryptocurrencies.

Bitcoins will equate in Russia to foreign currency

It was said by the Deputy Minister of Finance Alexey Moiseyev in an interview to Rossiyskaya Gazeta. A. Moissev told that the Ministry of Finance drafts now the bill which will regulate use of cryptocurrency in the territory of Russia. According to the Constitution of the Russian Federation the only currency in the country – the ruble, and the only issuer is the Bank of Russia, issue of any other currencies is illegal.

"Our purpose - to exclude the address of cryptocurrencies in the territory of Russia", - emphasized with the Deputy Minister of Finance.

However, at the same time he noted that the state is interested in development and implementation of blockchain technology. A. Moiseyev told that, for example, the experiment on implementation of blockchain technology is already made at information storage about securities now.

"But the blockchain technology so works that bitcoins always arise at its use as by-products. And it is clear that we should exclude responsibility for emission of bitcoins at operators of data in such situation that they had no risks to receive punishment", - considers the Deputy Minister of Finance.

A. Moiseyev noted that it is possible to draw an analogy between use of bitokin and foreign currency: "use is limited, it is impossible to emit foreign money in Russia, but the currency can be purchased, put in a pocket and to go abroad".

Therefore the Ministry of Finance works on refining of specific formulations in the preparing bill that "to operation on purchase of cryptocurrencies for the purpose of their use outside Russia, and it is equal and sales of bitcoins abroad for profit earning were possible".

The bill can be submitted for consideration in the State Duma already in until the end of 2016.

In Russia the national cryptocurrency can appear

Russia is going to enter national cryptocurrency, the Hand newspaper "Kommersant"[30] writes on Friday ]with reference to Rosfinmonitoring. The secretary of state, the associate director of department Pavel Livadny said to the edition that now this idea is discussed with concerned parties — representatives of banks, at meetings in the Ministry of Finance and the Central Bank of the Russian Federation. According to him, there is no bill[31] yet[32].

The interlocutor explained that the Russian cryptocurrency should not be emission-free — to be generated by the computer on a certain algorithm as bitcoin, it should have an issuer with the rights and duties. "financial institutions to which issue of cryptocurrencies will be entrusted" can be such issuer, according to him.

Department assumes that, most likely, this activity will be licensed. Exchange rubles or other currency on cryptocurrency of the company and citizens will be able in so-called exchangers — on special electronic platforms. Besides, it is going to regulate also rules of exchange. At the same time the personality purchasing cryptocurrency will be surely identified, "to minimize anonymous transfers".

It is supposed that along with introduction of domestic regulated cryptocurrency circulation in the territory of the country of other cryptocurrencies will be forbidden.

The authorities of Russia suggest to put for bitcoins in prison for 6 years

Amendments of spring of 2016 in the Criminal code prescribe punishment for release of bitcoins in the form of imprisonment for 7 years. Such term is offered to be set concerning top managers of financial institutions, including banks, insurance companies and the companies which are engaged in management of investments[33].

The Ministry of Finance of the Russian Federation prepared more tough amendments in the Criminal code setting punishment for release of monetary substitutes. Now for the same acts fine in the amount up to 500 thousand rubles or in the amount of salary or other income of the convict for the period up to three years, or imprisonment for a period of up to four years is offered. For organized group fine at the rate from 500 thousand to 1 million rubles or in the amount of the salary or other income of the convict for the period from two to four years, or imprisonment for a period of up to six years is prescribed.

Amendments to the State Duma will be introduced by the government, profile departments and also participants of the banking market as the newspaper claims, support innovations. Reasoning prohibition of virtual money, the Ministry of Finance relies on the first point of Article 75 of the Constitution of Russia: "Monetary unit in the Russian Federation is the ruble. Monetary issue is performed by exclusively Central bank. Introduction and issue of other money are not allowed".

The Investigative Committee promised to impose criminal liability for bitcoins

The head of the Investigative Committee Alexander Bastrykin in an interview to Rossiyskaya Gazeta in January, 2016 Goa promised to impose criminal liability for use of cryptocurrencies, including bitcoins[34].

"It is necessary to fight actively against different "soap bubbles" in financial market, i.e. the financial instruments which are not provided with any quick assets. Often the oversaturation of the market with such means involves financial crisis which passes further also to other markets" — the head of the Investigative Committee said.

According to Bastrykin, with opinion of SK in this question also other departments therefore SK suggests "set criminal liability for release and turnover of monetary substitutes are solidary".

"Need of introduction of criminal liability for the considered act is caused by the turnover of so-called virtual cryptocurrencies which was widely adopted in recent years, the most known of which is the bitcoin" — Bastrykin explained.

The head of the Investigative Committee notes that virtual currencies are supported with nothing owing to what biddings by them take place at high volatility.

"The rate of bitcoin only in the last two years grew more than by 1000%. Transactions in the system of cryptocurrencies are made anonymously, without the centralized control and is free. The anonymity of payments motivates to use of a virtual currency for commission of crimes, including such as drug traffic, weapon, terrorism financing, tax avoidance" — Bastrykin criticizes cryptocurrencies.

Earlier[35] was reported that investors in bitcoins predicted growth of bitcoin by 10 times. At the same time mass media reported that Sberbank intends[36] to use technology of protection of cryptocurrencies — blockchain, and the head of Sberbank German Gref[37] earlier[38] was recognized that he tried to invest in bitcoins.

2015: The Central Bank studies possibilities of cryptocurrency

On September 18, 2015 it became known of creation of the special working group by the Bank of Russia for studying of the blockchain technology used at payments with the bitcoin cryptocurrency.

"We even created the working group and we plunge into this subject. We would like to understand as far as it can be applied to calculations and payments in our community" — the vice-chairman of the Central Bank of Russia Olga Skorobogatova (the quote by Interfax) at the Kazan forum of the innovative technologies Finnopolis said.[39]

The blockchain technology represents the decentralized electronic database about transactions (some kind of online purse) to which all participants of a payment system have access. By attractive it is done by irreversibility of transactions, instant calculations and the good security from errors provided with collective access to all transactions.

The Central Bank creates working group for studying of the blockchain technology used at payments with the bitcoin cryptocurrency
The Central Bank creates working group for studying of the blockchain technology used at payments with the bitcoin cryptocurrency

According to the chairman of the Central Bank of the Russian Federation Elvira Nabiullina, the Bank of Russia sees risks in use of cryptocurrencies for doubtful transactions. Nabyullina noted that in Russia monetary substitutes to which the cryptocurrency can belong are prohibited if to consider it as a currency analog.

The head of Sberbank German Gref said that you should not prohibit cryptocurrency, despite the ambiguous attitude towards her.

"There are a lot of very disputable things connected with the invention of technology and development its, very disputable relation to bitcoin" — Gref told, having added that he is the owner of a small amount of bitcoins.

Despite criticism from the bank regulator, the Qiwi payment system prepares own cryptocurrency for start. The company registered several domains in which the word "bitrubl" is used, and prepares documents for registration of the trademark, Kommersant reports.[40]

Notes

  1. An outcome from a crypt: Russia will prohibit to pay off with bitcoins
  2. In Russia the mechanism of confiscation of cryptocurrencies will appear
  3. The authorities prepared new option of legalization of cryptoassets in Russia
  4. Intelligence agencies share secrets
  5. Owners of cryptocurrency in Russia can will lose anonymity
  6. Sberbank requested data on income from cryptocurrencies from the client
  7. Virtual assets received criminal determination the Supreme Court recognized cryptocurrency one of means of money muling
  8. [www.plusworld.ru of Cryptocurrency left the law on digital assets]
  9. the State Duma of Russia adopted the law "About Digital Financial Assets"
  10. the Arbitration Court of Appeal in Russia recognized cryptocurrency property
  11. the bill regulating cryptocurrencies is introduced To the State Duma. Russia will limit mining and purchase of tokens per customer
  12. the Ministry of Finance of the Russian Federation wrote the Draconian law about cryptocurrency
  13. the Head of the government of Russia called cryptocurrencies the deadlock project
  14. The Ministry of Finance and the Central Bank of the Russian Federation submitted the bill of regulation of cryptocurrencies
  15. [https://www.if24.ru/rossiyanam-ne-svyazyvatsya-s-kriptovalyutoj/ to Russians
  16. advise not to contact cryptocurrency]
  17. Russians are obliged to pay a tax on bitcoins
  18. The government will prepare the legal base of turnover of digital money
  19. The Ministry of Finance declared plans of the authorities "head and adjust" the address of cryptocurrencies
  20. The Ministry of Finance and the Central Bank until the end of the year will prepare the bill on regulation of cryptocurrencies
  21. The State Duma asked to explain it value of a blockchain and ICO
  22. the Head of the Central Bank at a meeting with Putin opposed bitcoins
  23. The Ministry of Finance supported prohibition of free sale of cryptocurrency
  24. The Moscow Exchange works on creation of infrastructure for biddings by cryptocurrencies
  25. For work with bitcoin the Ministry of Finance will not grant licenses
  26. Russia can legalize bitcoin and other cryptocurrencies next year
  27. On the materials interfax.ru and rbc.ru
  28. Rossiipo to the materials forklog.com, PLUSworld.ru
  29. In Russia there will be no criminal sanction for turnover of bitcoins
  30. [http://www.kommersant.ru/doc/2997059 a crypt
  31. [http://www.rbc.ru/finances/27/05/2016/574784d69a7947616b005c50?from=main In Russia
  32. decided to enter national cryptocurrency]
  33. of CNews: The authorities of Russia suggest to put for bitcoins in prison for 7 years
  34. the Head of the Investigative Committee suggested to toughen responsibility for the currency speculations
  35. Investors in bitcoins predicted growth of bitcoin by 10 times
  36. Kommersant: Sberbank puts on blockchain
  37. [http://www.gazeta.ru/business/news/2015/09/17/n_7602329.shtml German Gref invested
  38. in bitcoins]
  39. The Central Bank of the Russian Federation created the working group on studying of blockchain technology
  40. Cybersquatters turned on the press

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