“Russia is cutting off the branches of modernity”: what will the ban on the free circulation of cryptocurrencies lead to?

The State Duma is preparing to consider a bill that directly restricts the free operation of cryptocurrency exchanges/exchangers and mining uncontrolled by the Russian authorities. The editors of Bits.media collected expert opinions on the bill: “Rather for”, “Against” and “Maybe”.

Context: On April 26, 16 deputies reintroduced amendments to the law on digital assets to parliament. If the project becomes law, legal circulation of cryptocurrency will become possible only for organizations that have special approval from either the government or the Bank of Russia. It is reminiscent of the Belarusian system, when only the work of companies accredited by the state High Technology Park is considered legal.

Timing: the bill first appeared in November 2022 and caused opposition from active Russian crypto enthusiasts, as well as “one department” — the author of the project, Anatoly Aksakov, apparently meant the FSB. At the beginning of 2024, the bill was taken out, dusted off, corrected and sent again to the Chairman of the State Duma Vyacheslav Volodin. After the speaker’s go-ahead, the document should be submitted for consideration to the Financial Market Committee headed by Aksakov.. You can follow the progress of the project here.

“This is the first direct and understandable law. Previously, there were half measures»

Andrey Tugarin, founder of the law firm GMT Legal.

“The bill does not contain provisions that prohibit the circulation of cryptocurrency in the Russian Federation. The ban concerns the organization of circulation of digital currency, that is, assistance in the transfer of digital currency from one person to another. These are crypto exchangers and crypto exchanges.

The Russian regulator clearly does not want to allow the development of business in the cryptocurrency turnover segment, which is why we received just such bans. This is the first document with clear content since 2020, although not in favor of the market. All others before this were half measures, approximately, not completely.

If we talk about the circulation of cryptocurrency, I think there are no pitfalls, hidden intentions or anything else: they pass the law as best they can and when they get around to it.

If we talk about mining, then the obvious driver was energy problems that arose due to illegal consumption of electricity in a number of regions. The scale has reached the federal level and it is no longer possible to ignore the lack of legislation.”

“Instructions were given: to deal with crypto”

Artem Tolkachev, founder and head of Sputnik DLT, author of the telegram channel @twentyfourwords.

“I don’t agree that we are talking about banning the free circulation of cryptocurrencies. We are talking about a ban on the provision of services for the transfer of cryptocurrency from one person to another, but not about a ban on transactions with digital currency as such.

In Russia, most exchangers work in such a way that, in essence, one individual buys cryptocurrency from another individual for rubles or dollars. The bill does not contain a ban on these actions.. Is this an omission or was it originally intended, it’s hard to say. In general, there is no logic in the actions of the legislator on the issue of regulating cryptocurrencies.

The current version of 259-FZ “On Digital Currencies” already significantly limits turnover (prohibition of paying for goods and services). At the same time, no changes have been proposed to the Code of Administrative Offenses/Criminal Code regarding liability for violating the ban on “organizing circulation”. Also, the bill does not address the use of foreign providers.

It is possible that the surge in activity among legislators was a consequence of the terrorist attack at Crocus, after which instructions were given to “deal with crypto.”

We are witnessing another round of ill-considered regulatory approach. It cannot be explained by anything other than a misconception about the market and the opportunities that can be provided by truly well-developed regulation that does not drive the industry underground, but, on the contrary, establishes clear rules of the game for an already established market.”

“The reason is obvious: we need to replenish the budget”

Vladimir Menaskop Popov, IT lawyer.

“The free circulation of cryptocurrencies and the dissemination of information are already formally prohibited by the laws “On the National Payment System” and “On Digital Financial Assets”. It’s just that in Russia they like to re-adopt norms, making them more and more prohibitive.

Therefore, the answer to the question “A new law is needed so that only legal miners from a list approved by officials can sell crypto?” is extremely simple: yes, we need a list of affiliated persons who will be allowed, because others are not allowed. Whether this is good or bad, I don’t presume to judge, since jurisprudence works with formal truth.

I hope that the law will be adopted, since I am a supporter of cryptoshore. This is when you work outside a specific jurisdiction, and the circulation of funds is completely legal within the framework of international, not national law. That is, to put it simply, you work outside of fiat currencies.

I want people to understand: flirting with any state is fraught. First of all, for themselves.

Why is the bill needed right now? The answer is obvious to me: budget. Sanctions and other costs have taken a toll on it, so attacks on the IT segment, information business (which is neither business nor information) and other types of activities are an expected solution. The state does two things well: one of them is collecting taxes, fines and other taxes.”

“The ban will not help increase tax revenues”

Vladimir Smerkis, co-founder of the Blum exchange, ex-head of Binance in the CIS and Central Asia.

“Banning the circulation of cryptocurrencies will inevitably lead to the strengthening of gray markets. Such measures will increase the burden on authorities who will have to control illegal flows — instead of allowing the state to receive tax revenues and support legal crypto platforms.

We have seen many examples: the ban on cryptocurrencies in China, when China still occupies the leading position in terms of turnover and fades into the shadows, using neighboring jurisdictions like Hong Kong and Singapore. We see a negative example from India, where too high tax rates force citizens to trade via VPN, hiding their identity and hiding from regulators.

Russia has everything it takes to lead the crypto industry: excellent entrepreneurs, talented developers, companies with billion-dollar capitalization.

The Russian Federation leads in terms of turnover among international exchanges; Russians occupy the first places with OKX, BitGet and many other crypto platforms. The key to solving the problems of the crypto industry lies in dialogue.”

“It’s like keeping escorts but banning pimping.”

Sergey Mendeleev, founder of DEFI Bank.

“If we do nothing, then most likely the law will be adopted in its current form, and this will be the end of cryptocurrency turnover in Russia. Since banning the organization of turnover, leaving the turnover itself supposedly permitted, is something like banning car dealerships and gas stations, but mercifully leaving the opportunity to drive cars. Although the analogy with the ban on pimping and formal permission for escorting suggests itself much more.

Why did this happen now? In short, this is a struggle between the financial (Central Bank and the Ministry of Finance) and the industrial-economic (Ministry of Energy and Ministry of Economic Development) bloc for control over the mining industry. We still have a funny fight between two yakozuna. Let's see whose kung fu is stronger.

As for the bill itself, it is, of course, insane — everything will go from a gray but still understandable zone to deep underground, where there will be no rules anymore. And if now law enforcement officers know where to go with requests for information on transactions, then later they will be able to send letters to the village grandfather.

My value judgment is that the bill was written by NATO spies in the Central Bank under the dictation of the US State Department in order to deprive Russia of one of the main opportunities to circumvent sanctions. This should be done by the competent authorities, establishing who exactly wrote the document and who handed it to random deputies for signature, who, in my deep conviction, did not even read the text.”

“The list of interested miners has already been determined”

Sarkis Darbinyan, cyber lawyer, co-founder of Roskomsvoboda.

“It’s absolutely obvious: this is not at all what the industry expected from government regulation.”. In fact, the amendments really prohibit any turnover, except for sales by miners who are registered with the state. This is not about supporting and developing the industry. This is about using crypto only for yourself and only to the extent that Central Bank Chairman Elvira Nabiullina allows.

There is a concept of an Experimental Legal Regime that will allow, as an exception, the use of crypto and DFA as a means of payment. As a result, I think the regime will be greatly limited by the Central Bank, as well as the list of market participants who will be allowed to participate.

Most likely, this is a solution to some of their own problems for state-owned companies that trade resources in the markets of Asia and Africa.

I think the list of interested miners in whose interests the bill was introduced has already been determined in advance. And if the investigators dig deep, it may turn out that one of the authors has a business in mining. Back in 2022, the “Dossier” claimed that deputy Andrei Lugovoy has a crypto exchanger in Moscow City, as well as cheap mining in the Irkutsk region at the expense of the Bratsk hydroelectric power station on the Angara. In 2023, after Lugovoi’s email was hacked by Ukrainian cyber hacktivists, this became more obvious.”

“All Moscow City crypto exchangers are now not in the gray zone, but in the red zone”

Andrey Zakharov, investigative journalist, author of the book “Crypt”:

“All exchangers and exchanges will not only end up in the gray zone, as now, but they will end up in the red zone.”. This directly follows from the words of Deputy Anton Gorelkin explaining the project.

It is clear that additional laws will be needed. For example, amendments to the Criminal Code, according to which the reason for initiating cases will be simply the fact of organizing a crypto exchanger, and not the fact of laundering criminal money through it. At least in this sense, there will be a big blow to the Russian crypto industry, because exchangers and exchanges are an important part of the industry.

There will be some kind of subopercular activity. Do you want crypto? Either act illegally or buy from all these mining farms.

As for the ban for citizens, it’s worded crookedly, but perhaps they won’t ban it.. Although, again, if the law is adopted, we will have to wait for numerous clarifications.

It’s funny that the list of authors seems to have at least one beneficiary: Lugovoy with a farm in the Irkutsk region. It looks like a person is implementing a law that is beneficial to him because it will lead him out of the gray zone. But at the same time, Russia will follow the path of countries that are cutting off the branches of modernity. Crypt is the same bitch.

Is the law likely to be passed? Let's see. One conventional Kremlin tower, whose opinion is expressed by Nabiullina, is sharply against the crypt. And the other, for some (rather selfish) reasons, does not advocate legalization, but rather, the gray zone that exists now. When it became known at the beginning of 2022 that the Central Bank wanted to ban everything, quite a few departments opposed it. Perhaps there is a similar behind-the-scenes struggle going on now.”