As it was mentioned before, on September 1, there was a change in Russia’s stances on cryptocurrency as a new law banning cryptocurrency trading and mining was enacted. One of them, which many did not pay attention to earlier, makes a total ban on cryptocurrency in the country legitimate.
The law is clear: “According to the legal provision of the Russian Federation the government-authorized body with the consent of the Bank of Russia, may set a ban or restrictions for transactions in digital currency. ”
This provision was not envisaged in the first draft discussed during the 2022 fall; it appeared only in the version posted on the Duma’s website in April 2023.
This development is in line with the Central Bank’s long-standing aspiration to be granted the authority to prevent the use of cryptocurrencies in general. Though earlier people could not imagine it, it is seemed quite possible to be banned in near future.
Could Bitcoin Be Banned?
According to legal commentators, the “authorized body” could be Rosfinmonitoring or the Ministry of Finance . This body might at any point in time come up with the idea that it would not be acceptable for one or all cryptocurrencies to exchange and may do so without consent, as stated by Mikhail Uspensky, a lawyer and a member of the State Duma expert council on cryptocurrency regulation.
Denis Polyakov, the head of the Digital Economy practice at GMT Legal comments and agrees with Terentev, adding that the government could decide to prohibit any transactions with any cryptocurrencies including Bitcoin or Ethereum. However, if the ban extends to all the digital currencies, there arises one significant consideration – the notion of the so called “foreign digital rights” (FDRs) introduced by the new law.
Legalising The Ban /Taking The Case To Court
One must note that it may be possible to challenge the ban in court and this can be done by citing the FDR concept and applying it on the particular cryptocurrency in question. Though, this remains applicative since legal cases have not set precedents to the provision; it could provide a means for the continuity of transactions and services, as noted by Polyakov.
Winners and Losers
As stated by Uspensky, the law, known as the “law on legalization of mining” seems to be favorable to large Russian miners. However, for those exporters who were told they would be able to perform transactions in cryptocurrencies, the outcome remains nothing but a mirage. There could be immense problem to miners in areas where the government could decide to ban mining as the law provides room for the ban even when there is adequate electricity supply in a particular region.
Uspensky said the ban may lead to mass miner’s migration, the scale comparable to those historical ones in the Irkutsk region.
Navigating the Ban
The threatened emergence of problems in crypto services market tied to restrictions on advertisement and usage of cryptocurrencies has resulted in incidents exhibited by such platforms as Yandex and event organizers. At times, the penalties for such violations are expensive; however, according to the lawyers, they are not devoid of legal defenses.
For example, under the common law, sharing information through a personal site or a social network could not be qualified as advertising, as Uspensky noted. On the other hand, Polyakov has stated that individuals who are intent on carrying on with crypto adverts in Russia may aid in building legal cases as well as creating concrete legal requirements for what is fairly legal in crypto adverts.
Thus, as it has become clear in this article, the use of cryptocurrencies in the Russian Federation continues to be under threat in such uncertain context A virtually unpredictable environment regarding the use of cryptocurrency in Russia emerges given the effects of the new law.
