A Russian Federal Tax Service Letter released a few weeks ago spelled out issues – including an implied statement that cryptocurrencies are not illegal – amongst others that affect the legal status of cryptocurrencies moving forward.
Also read: Sberbank CEO Shares His Bitcoin Experiences
Russian Blockchain Conference Sparks Federal Tax Service Letter Concerning Virtual Currencies
The legal implications of the letter was the focal point at the recent event, ‘Blockchain & Bitcoin Conference Russia‘, on Nov 10. The conference was one of the biggest cryptocurrency events that took place in Eastern Europe. The event attracted dozens of representatives from the banks, corporations, media, as well as the public. It is a clear sign of inert interest in Russia with regards to cryptocurrencies, blockchain technology, and its legal status.
Service letter outlines*:
1) The Russian laws do not define such terms as money surrogate, cryptocurrency, or virtual currency.
2) The Russian laws do not contain any prohibitions as to operations with cryptocurrencies conducted by Russian citizens and organizations.
3) Using cryptocurrencies in transactions is a basis for considering such transactions as possibly related to laundering of illegally obtained money, and terrorism funding.
4) The FTS of Russia believes that operations related to procurement or sale of cryptocurrencies involving currency values (i.e. foreign currencies or external securities) and/or Russian currency are essentially monetary operations.
5) The existing monetary control system does not provide for reception of data on buy/sale operations with cryptocurrency from residents and nonresidents.
* According to Forklog.
Ambiguous Legal Status of Cryptocurrencies
“… Russian laws do not define such terms [cryptocurrencies]…”
At the event, Artem Tolkachev, the Chairman of Blockchain Community, shared his opinions on ways to constitute cryptocurrencies in Russia. First and foremost, cryptocurrencies lack a clear definition in Russia’s Laws, hence amendments to the legal status of cryptocurrencies in the Civil Code would be necessary. After that, suitable regulations could start to fall into place. This is very much in line with the implied response found in the service letter.
Cryptocurrencies Are Not Illegal
“… Russian laws do not contain any prohibitions as to operations with cryptocurrencies…”
The service letter has revealed that as for now, it is not illegal to carry out cryptocurrencies trade activities in Russia. However, individuals and companies are concerned about the outcome of the legal status of cryptocurrencies in Russia as this may affect organizations business plans in futures.
Russia has the reputation of being wishy-washy when it comes to whether cryptocurrencies are illegal or not. However, it is a positive sign that there are no prohibitions in carrying out cryptocurrencies trade activities, as compared to the earlier threats of imposing jail terms on bitcoin users.
Matters Relating to Nefarious Activities
“… Using cryptocurrencies [as] a basis for… laundering of funds and terrorism [financing]…”
The key concern for governments when it comes to cryptocurrencies is pretty much on how to devise measures to combat money laundering and other nefarious activities. Regulatory initiatives are generally well accepted by the public as compared to a total ban of digital currencies.
Also, in accordance with the service letter, Elina Sidorenko emphasized at an earlier event this year, “Cryptocurrency is rarely used to financing terrorism”. However, measures should be in place to give clear indications for Russia in terms of the Dos-and-Don’ts when it comes to cryptocurrencies.
Elina Sidorenko also pointed out that State Duma’s Working Group’s had scheduled a meeting. The purpose of the meeting will further discuss these related matters. The meeting will be held on December 15, 2016.
While the outcome is still unclear, the outlook for cryptocurrencies has become brighter. Once cryptocurrencies are given distinguishable legal status, other interconnected issues can be worked out.
[Disclaimer: Contains Unofficial translation]
Do you think further amendments in Russia’s Laws will come into place? If so, how soon? Share your views in the comment section below!