The digitalisation of the financial industry and the economy at large as well as the development of fintech increased public demand for cryptocurrency and advanced payment methods in Russia. However, the position of the country on cryptocurrency is still not clear.
People vs regulators
On one hand, the global industry has seen a huge inflow of cryptocurrency users, developers and startups. In fact, the share of Russians in the field is one of the biggest. Back in 2018, 12% of the population declared ownership of cryptocurrency, according to the State of Cryptocurrency research. To compare with, in the USA this number has reached only 7%.
On the other hand, Russian regulators are much less enthusiastic about this nascent technology than the citizens. Sergei Shvetsov, the first deputy governor of Russia’s central bank called cryptocurrency including Bitcoin, a pyramid scheme. President Vladimir Putin, in his words, revealed that cryptocurrencies are being used by villains to carry out illicit activities such as laundering money, drug trading and making illegal payments.
In late 2020, the Ministry of Finance strengthened the regulatory pressure on the sector. Now, a person might end up behind bars for not declaring one’s profits from cryptocurrency. In its turn, this has triggered a 37% decrease in interest in digital coins.
Attempts at legalization
Russia developed an interest in legalizing the buying and selling of cryptocurrency on official trading and exchange platforms in 2018. Back then, the Ministry of Finance published a draft law on cryptocurrency and also defined mining and smart contracts.
To protect users from being cheated in the scams, and unregulated Crypto Wild West, the government started the process of regulating the industry under the Civil Code. The authorities wanted regulations to allow cryptocurrencies to be included in a bankruptcy or a deceased person’s estate.
In July 2020, Putin signed the bill on digital financial assets into law that was to be enforced in January 2021. The law legalizes BTC and other forms of cryptocurrencies but barres its use in making payments for the purchased commodities and services.