in Crypto News
Russia has been on the fence about crypto for a while. For the past few years, the government has leaned more towards hostility than support, however, the law is rapidly changing and that’s good news for Russian crypto enthusiasts.
Russia’s New Approach to Crypto
The Russian government has never held a particularly favorable view of cryptocurrency. The government has claimed that crypto is an easy way to finance terrorism and launder money, and for these reasons it needs to be banned. As a result, it’s currently illegal to use digital currencies as a means of payment in Russia.
Going one step further, at the end of January, the Russian central bank suggested that the use of and mining of cryptocurrencies should also be made illegal. According to the central bank, in addition to their use in criminal activities, cryptocurrencies are pyramid schemes with boom and bust cycles that are dangerous for retail investors.
It looked like Russia was getting ready to give crypto the full ban hammer, however, we’ve just now learned that the government has completely reversed course!
On February 8th, in conjunction with the central bank, the Russian government announced that they’d drafted new legislation that would classify Bitcoin and other cryptos as an analog to currency (here is the original announcement, in Russian).
In other words, as far as the Russian financial system is concerned, cryptocurrencies will be treated like Dollars or Yen. These regulations are similar to El Salvador’s approach to crypto, where Bitcoin is recognized as legal tender.
In just a few weeks, the central bank shifted from a full ban on crypto, to treating digital assets like currencies. That’s great news for Russian investors! However, there is still a catch…
What’s the Catch?
Even though the government has dropped its plan to make crypto illegal, Russians aren’t going to be able to do whatever they want with their coins. For instance, users must declare all transactions over $8,000 to the proper authorities, otherwise the transaction is considered illegal.
Also, crypto investors will be required to use a Russian licensed exchange or bank to buy and sell their crypto. Furthermore, it’s not entirely clear if investors will be able to withdraw their coins to a self-custody wallet like Exodus.
The new regulations are worded somewhat vaguely, and they could suggest that investors will only be able to custody their coins on an exchange, or withdraw them to a crypto-enabled bank account. If that’s really how the regulations will work, then it goes heavily against the crypto mantra of not your keys, not your crypto.
We’ll know more in the coming weeks, and hopefully it will turn out that investors can withdraw their coins to whatever wallet they want.
Even though Russia’s approach to cryptocurrency and blockchain technology is far from perfect, it’s still a lot better than the central bank’s previous plan to outlaw the entire asset class.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.