Is bitcoin banned in Russia today and how will its position change in 2021 – experts answer

CONTENT

  • The government will strengthen the regulatory control of the cryptocurrency industry

  • Industry officials consider digital asset law unfinished and crude

  • The authorities will not be able to prevent payments in cryptocurrency

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At the end of July 2020, Russian President Vladimir Putin signed the law “On Digital Financial Assets” (DFA), according to which, from January 1, 2021, cryptocurrencies in the country will become a legalized financial instrument. At the same time, settlement in digital assets, according to the document, will be prohibited. This and other contradictions became the reason for criticism of the law from the members of the crypto community.. 

To understand the current situation of cryptocurrencies in Russia and the changes that will take effect from the new year, the editorial staff of BeInCrypto decided to find out the opinions of experts.

One of the first to share his vision of the situation with us was the co-founder and CEO of the investment management application Raison.ai., Alexander Zaitsev.

– How has the position of bitcoin and other cryptocurrencies changed after Vladimir Putin signed the law on the regulation of cryptocurrencies?

So far, the adoption of the law has not changed much. Yes, now all crypto-exchange operations of Russian clients on the territory of Russia will be regulated and bitcoin will “come out of the shadows”. For law-abiding investors who use cryptocurrency to maintain or increase capital, this will make life easier. They will no longer be afraid of blocking their accounts by banks and other financial institutions. Those accustomed to using bitcoin in gray schemes will take on additional risks.

Most Russians conduct Bitcoin transactions either through crypto exchanges (peer-to-peer transactions) and systems like LocalBitcoins (also peer-to-peer transactions in which LocalBitcoins acts as an intermediary, like in an auction), or through foreign providers.

The volume of purchases of bitcoins for rubles. Data: LocalBitcoins

I do not yet know domestic providers that would work within the framework of the Russian legal field and new legislation. Perhaps such will appear, but it is not a fact that Russians will use their services.

– What do you think, will regulators try to track crypto transactions on the territory of the Russian Federation? Do exchanges like, say, Binance, information about its users to the authorities?

From the point of view of the new legislation, it will not be difficult to track crypto transactions on the territory of the Russian Federation. Most likely, the responsibility for this will be assigned to the platforms operating in the Russian legal field. This is how the system works in the European jurisdiction in which our Raison.ai platform operates. European legislation obliges us to score all blockchain transactions and take action in case of suspicious cases – for example, if bitcoins come from mixers (services in which transactions can be confused, increasing their anonymity). We are obliged to block such transactions, find out the circumstances of the transaction.

If the system is the same in Russia, operators will also be responsible for tracking crypto transactions. As far as Binance is concerned, as far as I know, the exchange is still not legally regulated even though they recently applied for registration in Singapore. In the future, in the event of criminal and administrative proceedings, Binance will be required to transfer data where it is domiciled – if required by local authorities. However, I doubt that today the exchange shares information on all clients, although only representatives of the company itself can accurately answer this question..

Binance’s position in the ranking of exchanges according to the adjusted data of the trading volume of the CoinMarketCap resource

For some Binance customers, the lack of regulation is a plus, for others it is an additional risk. If a gray bitcoin transaction occurs between users and Binance does not slow it down, a bona fide buyer could get additional problems.

– How to conduct operations with cryptocurrencies from 2021 in Russia?

So far, we can only speculate. Will Russian businesses be able to nominate accounts in rubles, but accept payments in bitcoins? Most likely not, but it is possible. If trading providers act as a crypto acquirer (change the cryptocurrency into rubles and send them to the recipient’s bank accounts), legally this will not be considered a settlement in bitcoins, but de facto it will be. For businesses, such an additional opportunity to receive payment from the buyer is undoubtedly a plus.

The purpose of the transfer on the blockchain can only be determined when the wallet is served by a regulated operator. If, in the future, all crypto transactions in Russia are secured by regulated exchange operators, they will be required to track the objectives of the transactions and report suspicious cases. This is required by the anti-money laundering law.

Read also: Full version of the evolution of the law on cryptocurrencies in Russia

Tatiana Maksimenko, official representative of the Garantex cryptocurrency exchange, in turn, believes that the process of buying and selling cryptocurrencies, against the background of the entry into force of the law on digital financial assets and digital currencies, is unlikely to change significantly in 2021. 

“As before, no one bothers to buy bitcoins on one of the foreign trading floors. Most of the operations for the purchase and sale of cryptocurrencies were not carried out on sites registered in Russia anyway, “the expert noted.. 

The law, according to Tatyana Maksimenko, prohibits making payments for goods and services using cryptocurrencies, but no one did it openly.. 

Is bitcoin banned in Russia today and how will its position change in 2021 - experts answer

A map of crypto ATMs and places where you can legally pay in bitcoins, which demonstrates the level of distribution of cryptocurrencies in the Russian Federation, in comparison with Europe. Data: Coinmap

“If such operations were carried out, they were done through a series of exchange operations with fiat and in the financial statements they were displayed as ordinary operations with the Russian ruble,” a Garantex representative explained her point of view.  

Large operations for the purchase and sale of cryptocurrency, in her opinion, will continue to be carried out in a semi-legal mode – when the seller and the buyer meet face to face, exchange money and a conditional flash drive. 

“If anything changes, it will be a tougher attitude of banks to incomprehensible transfers between individuals. But this is connected not so much with the law on the CFA, as with other initiatives and laws, including a ban on replenishment of anonymous electronic wallets or with the latest proposal of the Ministry of Finance to confiscate funds from Russians, if the source of their origin is not confirmed, “said Tatiana Maksimenko.

According to the expert, Rosfinmonitoring and the banks themselves should be engaged in tracking operations, so as not to fall under the sanctions of the Central Bank. But to determine the purpose of each transfer, if we are not talking about millions of rubles at a time, according to her, it will be quite difficult. 

“In any case, the era of universal use of Sberbank. Online is coming to an end. The state will take control over this huge flow of money that circulate between individuals, “- summed up the representative of Garantex.

Summing up

Despite the readiness of the legislative framework, how exactly its application will change the position of the digital asset market in the Russian Federation is not fully known. Experts draw attention to the fact that the government does not have the resources for total control of all operations with cryptocurrencies. Against this background, it can be assumed that market participants, despite the adoption of the law, will be able to use coins for illegal transactions. To other conclusions:

  • It is beneficial for the government to control the digital asset market. In the future, in order to improve the conditions for monitoring transactions with cryptocurrencies, regulators may take additional actions.
  • The adopted law on digital assets does not describe in detail the principles of interaction between participants in the digital asset market. Representatives of the cryptocurrency-related business also do not fully understand how innovations will affect the position of cryptocurrencies in the country..
  • The ban on settlements in cryptocurrency is not an obstacle to conducting semi-legal transactions. For example, using mixers to increase the anonymity of operations.

At the time of this writing, there is no effective regulatory framework for cryptocurrencies in the Russian Federation. In other words, as of August 6, 2020, Russian laws do not recognize the existence of bitcoin – they do not mention digital assets. Accordingly, operations with cryptocurrencies are not prohibited in Russia today..

 

Disclaimer

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Is bitcoin banned in Russia today and how will its position change in 2021 - experts answer
Is bitcoin banned in Russia today and how will its position change in 2021 - experts answer
Is bitcoin banned in Russia today and how will its position change in 2021 - experts answer
Is bitcoin banned in Russia today and how will its position change in 2021 - experts answer

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