Russia's full ban on Cryptocurrency: NEW LAW

On September 1, the Russian law on restricting cryptocurrency turnover and mining finally came into force. The law contains a provision that few people initially paid attention to. However, it makes a complete ban on cryptocurrency in the country a reality, News.az reports citing Bits.media .

The legal provision is straightforward: “The government-authorized body, in agreement with the Bank of Russia, has the right to establish a ban or restrictions on transactions with digital currency.”

This provision was not in the first version of the draft in the fall of 2022. It appeared in the version that the authors posted on the Duma website in April of this year.

This is exactly what the Central Bank has been trying to achieve since early 2022: the ability to ban any cryptocurrency transactions. Few believed such a prospect could become a reality. Is it now a reality?

Ban Bitcoin?

It could be easy. The "authorized body" of the government will likely be Rosfinmonitoring or the Ministry of Finance, according to legal experts interviewed by Bits.media. This body could decide, one day, say on November 7, to prohibit transactions with a specific cryptocurrency, or with all of them at once, says Mikhail Uspensky, a lawyer and member of the State Duma expert council on the legislative regulation of cryptocurrencies.

Indeed, if the government-authorized body deems it necessary, it could prohibit transactions with a specific cryptocurrency—bitcoin, ether, or any other, agrees Denis Polyakov, head of the Digital Economy practice at the law firm GMT Legal. However, if the decision concerns all digital currencies in Russia at once, there is an important nuance, explains a lawyer at GMT Legal. It relates to the concept of "foreign digital rights" (FDR), which was introduced with the new law.

Will Bitcoin Be Banned?

You can try to challenge it in court. Armed with the term FDR and applying it to the cryptocurrency of interest, you might try to continue making transactions and providing services—fighting back in court. At least theoretically, suggests Denis Polyakov: "All thoughts are still just theory, as there is no practice yet." According to the GMT Legal lawyer, the following cryptocurrencies could be considered as FDR:

Beneficiaries of Change

Who benefits from the law that the deputies called "the law on legalizing mining"?

Large Russian miners, believes Mikhail Uspensky, a member of the State Duma expert council. Exporters, to whom the authorities promised transactions in cryptocurrencies, have received nothing but promises, according to lawyers. However, miners in regions where authorities want to ban mining will face significant challenges.

The law allows the government to impose such a ban at its own discretion, and the document does not mention, for example, that the region must have a shortage of electricity. As a result, such a ban in a region rich in mining farms, like the Irkutsk region, could, in Uspensky's words, "provoke a migration of miners comparable in scale to the campaigns of Genghis Khan."

Lay Low vs. Set a Precedent

What should be done if the ban on cryptocurrency advertising and transactions leads to the collapse of the crypto services market?

In fact, the actions of such an advertising platform as Yandex or event organizers hiding signs with the word "cryptocurrency" are seen by lawyers as overly cautious. The fines for violating the advertising law are significant—up to hundreds of thousands of rubles for a single ad. However, lawyers say a good lawyer can advise workable solutions.

For example, under common law, it is not considered advertising to provide information on your own website or social network page, suggests Mikhail Uspensky. It might be smart to operate without drawing attention to yourself, says the head of the Digital Economy practice at GMT Legal. “On the other hand,” reasons Denis Polyakov, “the brave ones who retain the advertising of their crypto projects in Russia could establish a basis for judicial practice and help develop rules—what can still be included in the advertising of crypto projects, and what is absolutely forbidden.”

News.Az