Economic and Legal Aspects of Cryptocurrency Usage in Russia

Abstract

Cryptocurrencies have become an intrinsic part of our new reality. At the same time legal nature and preferred regulatory regime for cryptocurrencies have long been a hot topic. The treatment and legal status of cryptocurrencies varies across different jurisdictions, from categorization as a means of payment or asset, to a complete ban. This article analyzes the new Russian legislation on cryptocurrency and tokens adopted this summer which is aimed at concluding the uncertainty regarding the legal nature and regulatory regime of cryptocurrency and tokens in Russia. The new legislation outlaws the use of cryptocurrency and tokens as means of payment and sets in stone their status as assets. It also imposes additional liabilities on the cryptocurrency holders, including obligation to declare cryptocurrency to the tax authorities which may result in such cryptocurrency being subject to Russian tax. We further make an overview and analyze the implications of the recently imposed tax and criminal liability for failure to report cryptocurrency transactions and failure to include profits from operations with cryptocurrencies into the taxable income, and administrative liability for accepting cryptocurrency or tokens as means of payment for goods or services. Finally, we consider the place of Russia in the global cryptomarket, outlook for cryptocurrencies, recent Russian precedent transactions involving cryptocurrencies and the Central Bank experiment with the Russian ruble.