Whether cryptocurrencies in Russia are legal? In fact, it is legal for an ordinary person to buy bitcoin. Yuri Gugnin is the founder of Karma investment platform (in register of the Central Bank under 259FZ) as well as the New York hedge fund Evita which allows investors to invest in real estate renovations with legal security tokens.
Yuri was a coauthor of three federal laws relating to cryptocurrencies, tokens, as well as advising the South Korean, Turkey, Turkey, and Chinese governments on legalizing digital assets.
This video of Elizaveta Olegovna, Central Bank’s report on the risks and toffees associated with cryptocurrency has gone viral. It is worth looking into: Are cryptocurrencies legal in Russia? How can an average person buy bitcoin?
Today’s legal status of cryptocurrencies within Russia
As in many countries, Russia interprets certain digital assets based on their true nature. For example, if a token promises income but the holder is not involved, it is considered a security.
It doesn’t matter if it’s a “coin” which can only be bought and sold . It’s a cryptocurrency.
The laws of Russia describe the types of digital assets today
259FZ 31.07.2020 states that this digital payment method does not have one issuer. The laws do not prohibit the purchase or sale of cryptocurrency, nor mining.
It is not possible to purchase goods or services in cryptocurrency on the Russian Federation’s territory. This is not possible even for US dollars. This is because cryptocurrencies can be equated with foreign currencies.
Digital Financial Assets (DFA).
This is known as security tokens in crypto jargon. The US SEC defines security and guides the world. 259FZ of 31.07.2020 also explains the essence of CFA. These are securities and monetary claims, such as factoring or loan agreements.
Only regulated market participants are allowed to trade in CFAs in Russia Federation. After a year and half of the law’s existence , the Central Bank selected the Atomyze platform as the first operator to produce DFA.
Digital Utilitarian Rights
The chapter on digital utilitarian rights is covered in the 259FZ of 02.08.2019. These tokens can be issued via investment platforms and can be used to describe the right to demand transfer of items, exclusive rights to intellectual activity results, or the performance and provision of services.
The law also stipulates that tokens cannot be issued on top of any notarial or state-registered items. This excludes real estate and car markets.
Comment on the legality and lawfulness of cryptocurrency transactions in Russia Federation
In 2018, we completed fully legal transactions for the import of South Korean goods to be used as cryptocurrency.
An individual entrepreneur sold cryptocurrency to our LLC. We then purchased physical goods in Korea for this cryptocurrency. Everything went well. We were issued bills of lading by customs and submitted a Moscow tax return.
Comment on the Central Bank’s report on the risks of cryptocurrency
The report stated that the Central Bank intended to ban the use of Russian infrastructure (banks and brokers regulated by it) for the purchase or sale of cryptocurrencies. The Central Bank of the Russian Federation also planned to make agreements with other Central Banks regarding the exchange of information about operations using crypto.
- Russians can’t buy cryptocurrency from a Russian broker or bank.
- They can also do it with foreign market participants.
They distorted the message in social media and the media as usual and caused panic in the format of “now in Russia everybody will be imprisoned because they have the crypt”. However, such a thesis does not hold true.
A bill regarding the regulation of cryptocurrency in Russia has been prepared. The Ministry of Finance is currently developing the concept.
Where can you legally buy bitcoin?
Many countries around the globe have legalized the trading of cryptocurrency and allow you to legally buy or sell bitcoin, ether, and other assets. These include the United States, Japan, South Korea, Germany, Latvia and Luxembourg.
When we speak about taxes, then
- You can’t get them any if you are not a resident of the U.S.
- Individuals in Switzerland and Liechtenstein are exempt from tax on cryptocurrency trading . This is because bitcoin can be equated with ordinary foreign currency.
- If you have cryptocurrency in Germany for over a year and earn less than 600 EUR in a single year , there are no taxes. It is interesting to note that there are a lot of ETFs that have “natural” bitcoin on their balance sheets, in contrast to ETFs that have bitcoin derivatives or futures.
- Latvian law taxes cryptocurrency as property. also imposes a 20% exchange tax on the sale and purchase of cryptocurrency (if you make a profit in EUR).
- Russians will not be permitted to purchase anything in Japan or South Korea because there is no crypto market.
This article is not intended to be a tax advisory. For more information, it is best to contact the specialized lawyer in the country you are interested.
Is there a better place to start a crypto-business?
Many entrepreneurs are wondering where it is best to do business with blockchain and cryptocurrency. According to CB Intelligences statistics, venture rounds for products related the blockchain were raised in 2021 at $ 25B worldwide. $ 14B of that was in the United States. New York was the leader with $ 6.5B in funding.
Of the cryptocurrency-friendly countries listed above, the easiest way to open a legal entity and a bank account in the U.S. is even without being in the country or being its resident. It is worth looking at the American ecosystem.