Russia is making it nearly impossible for its citizens to trade or transfer cryptocurrencies abroad with a new law that “legalizes” digital assets.
A bill to regulate domestic coin trading is expected to be debated in the country’s House of Representatives within the next few days. It brings restrictions, penalties and fines.
The framework would also prevent global cryptocurrency platforms from operating in the Russian market unless they comply with Russian government controls.
Russians will have access to a small number of coins
Russia is preparing to introduce long-awaited regulations regarding cryptocurrency operations. The country’s Ministry of Finance announced that the respective bills will be submitted to the House of Representatives next week.
The bill is expected to legalize digital currencies like Bitcoin and allow ordinary Russians to trade them, but access to the market will be tightly controlled and limited.
The bill creates a “cage for investors,” the Russian edition of Forbes said in an article. Most people may forget to buy and sell cryptocurrencies in the way they are used to.
In the future, coin transactions will only be processed by service providers that Russia deems legitimate and compliant with anti-money laundering laws.
Russian banks will be prohibited from making payments to foreign cryptocurrency platforms such as exchanges unless they go through a licensed local intermediary.
Qualified professional investors will be able to trade almost any currency, while the general public will only be allowed exposure to a small number of approved currencies based on liquidity and market capitalization.
They are not allowed to spend more than 300,000 rubles per year on cryptocurrencies through a single intermediary. Yuri Brisov, partner at Digital & Analogue Partners, summed it up for Forbes:
“A whitelist of 5-10 major cryptocurrencies is expected. Probably Bitcoin, Ethereum, probably Solana, TON. 300,000 rubles is about $3,700 at the current exchange rate. With this amount you can buy about 0.04 BTC.”
Violators of the rules will be subject to fines or imprisonment.
The bill implements a regulatory concept presented by the Bank of Russia late last year and was recently approved by the Government Committee on Legislative Activities. It must be adopted by July 1 at the latest.
Additional legislation would introduce financial penalties for those who violate established crypto rules. RIA Novosti news agency revealed the details in an independent report citing knowledgeable sources.
Under the proposed amendments, intermediaries that transact with non-accredited investors in excess of the threshold of 300,000 rubles will be subject to fines ranging from 700,000 rubles to 1 million rubles (approximately $12,000).
In addition to administrative penalties, companies involved in illegal activities such as mining will be held criminally liable, and their owners and representatives will face prison terms.
Digital currencies involved in such operations are already recognized as property under Russia’s Criminal Code and Criminal Procedure Code and can therefore be seized and confiscated.
The bottom line is that to avoid trouble, Russians must conduct all coin-related transactions through domestically registered or licensed organizations. Cryptocurrency market analyst Viktor Persikov elaborates:
“Thus, even if transactions such as the sale of virtual currency are not prohibited per se, any activity that falls outside this boundary is effectively classified as a violation.”
Moscow leaves Russian cryptocurrency users with few options
Since Russian banks came under Western sanctions, cryptocurrencies have been widely used by Russians not only as an investment tool but also for sending money abroad and making international payments.
Experts say the common scheme of exchanging rubles for a stablecoin like Tether and withdrawing the amount to a foreign bank account will simply not be viable for most people.
Peer-to-peer transactions will not work, as Russian banks will not process payments to unlicensed platforms or foreign exchange, and all transactions over 100,000 rubles will be closely monitored.
The legal option to use a licensed exchange is limited to 300,000 rubles per year, and foreign crypto platforms, with the exception of those operating in a few “friendly” countries such as Kyrgyzstan, Kazakhstan and Belarus, may refuse to accept crypto remittances from Russia, as well as Iran and North Korea.
“The iron curtain is coming down on the virtual currency market,” the Russian-language version of Forbes said, noting that the iron curtain is being brought down by both sides.
Major exchanges around the world have already withdrawn from the Russian market. Leader Binance withdrew in 2023 following Moscow’s invasion of Ukraine the previous year. OKX stopped trading in rubles around the same time, and Bybit closed its P2P market for transactions involving fiat payments from Russian banks.
