Russia’s stance on bitcoin and cryptocurrencies, in general, remains very unclear. While the authoritarian nation has embraced the gospel of distributed ledger technology (DLT) wholeheartedly, the story is not the same for the monetary applications that rest on top of blockchain protocols.
Bitcoin not Legal Tender
It all began in 2016 when bitcoin became a forbidden fruit in Russia. As such, The Vyborgsky District Court of St. Petersburg, following the request of the Prosecution Office, blocked Bitcoininfo.ru site. According to the court, portraying the flagship cryptocurrency as a “virtual payment instrument and a store of value,” is a violation of the country’s Federal Act.
According to RAPSI, the country’s legal information agency, the Supreme Court of Russia has ordered the St. Petersburg City Court to consider an appeal to the ban of the website.
Notably, in 2017, the Oktyabrsky District Court of St. Petersburg gave a ruling in favor of the St. Petersburg Prosecutor’s Office for the shutting down of 40 crypto-related websites, claiming that they encourage bad actors in using these virtual assets to perpetrate crimes. In its words:
“Cryptocurrencies, including Bitcoin, are a money substitute contributing to the growth of the informal economy, and cannot be used by citizens and legal entities in the Russian Federation. The free flow of information about digital currencies implies active use of cryptocurrencies in trafficking illicit drugs, illegal weapons, forged documents and other criminal activities.”
However, the St. Petersburg City Court reviewed the appeal back in March 2018 and lifted the embargo on the forty websites. The prosecutor’s office appealed in a bid to supervise the execution of new legislation on specialty items entitled “regime objects.”
Harsh Crypto Laws
In January 2018, Russian President Vladimir Putin declared his office would work in collaboration with the Central Bank in formulating laws to govern its crypto ecosystem.
“This is the prerogative of the Central Bank at present, and the Central Bank has sufficient authority so far. However, in broad terms, legislative regulation will be definitely required in future,” he said.
Amidst this backdrop, On March 6, 2018, the Russian Ministry of Finance declared it was drafting a regulation to criminalize the use of virtual currencies as money in the nation. Also, BTCManager published a story stating that all crypto-to-fiat transactions more than 600,000 rubles (about $9,600) in Russia are subject to currency exchange regulation, the same law that applies to fiat transactions in traditional financial institutions.
The Russian nation does not entirely like the idea of complete decentralization and total freedom to the masses. Therefore the local cryptocurrency industry may never be given a chance to survive.
In other related news, on April 14, 2018, Russia imposed a ban on the social messaging app, Telegram merely because owners of the app refused to give the government encryption keys that would enable them to view people’s private chats on the platform.