Syed Rahman considers the new law that makes a ban on crypto in Russia a possibility.
The Russian law on restricting cryptocurrency turnover and mining finally came into force on September 1.
The law makes a complete ban on cryptocurrency in Russia a possibility, as it states: “The government-authorized body, in agreement with the Bank of Russia, has the right to establish a ban or restrictions on transactions with digital currency.”
While this all-important provision was not in the first draft of the law two years ago, it was included in the version posted on the website of the Duma (part of the Russian parliament) in April this year.
The law creates the power to prohibit transactions involving either specific cryptocurrencies or all of them. At present, however, the theory behind the law has not been put into practice. There is the possibility – which is so far untested – that under common law, providing information on a website or social network page may not be considered advertising. This, in turn, could establish a basis for judicial practice and help develop rules regarding what is allowed and what is banned in relation to crypto.
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This law seems to be at odds with other legislation recently enacted in Russia. In response to increasing financial pressure on the Russian economy due to international sanctions, Russia enacted legislation to legalise cryptocurrency mining and permit the use of cryptocurrency in international payments.
Historically, Russia has adopted an anti-cryptocurrency attitude. As recently as 2022, the Central Bank of Russia was pushing for a ban on all cryptocurrencies. However, it appears that Russia’s hand was forced to allow international payments in cryptocurrency.
Those operating either within Russia or the cryptocurrency markets will need to be mindful of the evolving legislative landscape, both in Russia and internationally. Both money laundering and sanctions avoidance risks need to be identified.
Russia’s latest move is a reminder of the need to remain mindful of the complex legal frameworks dictating the parameters within which businesses can continue to operate.
