A document issued by the Russian Federal Tax Service finally presents the first official position on the status of Bitcoin and cryptocurrencies in Russia, equating them to foreign currency.
‘No Specific Legislation’ Banning Bitcoin in Russia
The formal letter, dated 3 October 2016, states that for legal purposes, cryptocurrencies should be treated as any other foreign currency. These require no financial reporting of transactions.
The legal consultant for Deloitte and head of the Russian blockchain community, Artem Tolkachev summarized the document:
- The concepts of surrogate money, virtual currency, and cryptocurrency are not defined under Russian law;
- There is no specific legislation prohibiting Russian citizens and organizations from using cryptocurrencies;
- Using cryptocurrencies in transactions may form a basis for investigating those transactions regarding laundering money and terrorist activities;
- According to the Federal Tax Service, buying and selling cryptocurrencies using foreign exchange assets (currency and securities), or Russian currency is considered a foreign currency transaction;
- Under the current system, there is no obligation for residents or non-residents to provide information on foreign currency transactions (and hence cryptocurrency transactions) to the authorities.
Blanket Ban is Now Unlikely
This document does not guarantee, however, that new regulations will not be introduced. Especially given the historically tumultuous relationship between the Russian Finance Ministry and Bitcoin. Nevertheless, in the past six months, the stance of the government has reportedly softened.
An interview published this week, with Elena Sidorenko, Head of the Russian Federation Working Group on Cyber Security, would suggest this is the case. The group was formed at the beginning of 2016 to study cryptocurrency and blockchain technology. The evaluation of these studies will outline the prospects for further development.
In the interview, Sidorenko states that there is currently no legal framework to regulate cryptocurrency in Russia. One of the main tasks of the group is to put everything on a legal footing. Legal regulations must be accompanied by three components: rights, obligations, and responsibility for failure.
The group feels strongly that a ban on cryptocurrency will only serve to slow down development of blockchain technologies in Russia. There is an upcoming meeting of the group on 15 December, which will put forward questions for the Finance Ministry.
These will address:
- the status of cryptocurrencies
- possibilities for Russian mining
- functions of the Central Bank
- cross-border transactions
- requirement for exchanges
After a rough ride, cryptocurrency in Russia is now in somewhat rude health. Everything seems to be pointing towards regulation of the market, rather than the previous attempts to blanket ban “surrogate currencies.” Even the CEO of Russia’s oldest and largest bank Sberbank recently admitted to buying and selling Bitcoin.
Will we see regulated Russian Bitcoin businesses in the near future? Share your thoughts below!
Images courtesy of razor-forex.com