Russia's "Digital Currency Act" restricts cryptocurrency investments for ordinary residents

According to local Russian media reports, Russia's recently revised bill "On Digital Currency" restricts ordinary investors from purchasing cryptocurrencies while providing a legal basis for some cryptocurrency payments. The draft law proposed by the Russian Ministry of Finance also imposes strict requirements on platforms operating with digital assets.

Russian citizens who fail the test can only buy $600 worth of crypto per year

Russia’s Ministry of Finance recently submitted an updated version of its “Digital Currency” bill to the government, which aims to comprehensively regulate the country’s crypto market. Details about the legal provisions were revealed in reports from Russian media this week.

According to the draft, qualified professional investors will be able to trade crypto assets without restrictions. However, for ordinary Russians, they need to take a special "exam", and those who pass the exam will be able to buy up to 600,000 rubles (about 7,000 US dollars) worth of cryptocurrencies per year; for those who fail the test, they will only be allowed to trade crypto assets with a total value of no more than 50,000 rubles (about 600 US dollars) per year.

The new bill defines “digital currency” as “a series of electronic data contained in an information system that is accepted as a means of payment or investment instrument other than Russian legal tender.” In short, digital currency can be considered property in Russia.

The wording appears to provide a legal basis for the use of cryptocurrency payments. At the same time, the bill stipulates that Russian legal entities, including subsidiaries of foreign companies and international organizations established in Russia, and individuals who reside in the country for more than 183 days in a 12-month period, may not accept digital currencies as a form of payment for goods and services.

The Ministry of Finance has been lobbying to legalize the circulation of cryptocurrencies in Russia, while the central bank is against the idea and suggests banning any cryptocurrency-related activities, such as issuing and trading digital currencies. Most other institutions in Moscow support the Ministry of Finance’s approach, but dissenting voices will also be heard.

Russia to Introduce Strict Standards for Cryptocurrency Companies

The bill “On Digital Currency” will impose strict standards on crypto platforms offering services in Russia. An “exchange operator” that offers buying and selling of digital currencies under its own name and at its own expense will have to maintain a capital of at least 30 million rubles. The mandatory threshold for “digital trading platform operators” or “organizations conducting auctions” is 100 million rubles.

If the bill is passed, these companies will also need to provide the following information: annual reports, maintain records of digital currency owners, store and back up transaction data every day, and conduct internal audits. Service providers will be added to a special register, and their every move will require authorization and supervision by an agency appointed by the Russian government.

If Russian lawmakers approve the bill, it is expected to take effect on January 1, 2023. The State Duma, the lower house of Russia’s parliament, is currently reviewing an amendment tailored to regulate the taxation of crypto-related businesses in the country.