Draft Law on Money Surrogates to be Reviewed by the Russian Parliament in February

News and Analysis

Members of Russian legislative assembly, the State Duma, may review a new draft edition of the Administrative Violations Code in the first reading as early as this February. The draft law implies de-facto legalization of operations with bitcoin and other cryptocurrencies.

The legislative initiative has been submitted to the State Duma in late 2015. Previously the community expected the new Code would become the first step to banning cryptocurrencies in Russia; however, the new edition’s originators offer to copypaste any decisions made by European and British regulators as to cryptocurrency integration.

In particular, the money surrogates subject to banning under the proposed Code do not incorporate

“any electronic money issued and circulating in accordance with legislation of the CIS countries, the European Union, as well as the United Kingdom.”

The submitted draft law still raises many questions. However, at least it excludes actual possibility of criminal punishment for bitcoin operations as opposed to the initiatives by Russian Ministry of Finance.

Earlier, the Ministry of Finance prepared several draft laws making cryptocurrency operations a criminally punishable act. However, the Ministry of Economical Development criticized the draft laws.

“We will continue protecting the consumers of financial services. We’re developing penalties for distribution of money surrogates, including bitcoins, and for establishment of Ponzi schemes. We will prepare the draft laws and submit them to the State Duma,” said Anton Siluanov, Russian minister for finance, earlier in 2015.

Former deputy minister for finance, Alexei Savatyugin, however, stated that cryptocurrency was the major financial breakthrough in fifty years. He added:

“I understand the banners’ logic very well. I should note that the Central Bank is way more constructive about it now. They don’t say it must be banned, they say let’s take a look. It is my former colleagues from the ministry of finance who propose criminal punishment for cryptocurrency issuance. It is they, not the Central Bank.”

Earlier the Russian Ministry of finance stated it considers bitcoin and the blockchain separately. Probably, no one is going to ban the technology underlying bitcoin. However, recently the regulator presented a draft law on banning Ponzi schemes, which they deem similar to bitcoin. The ministry of finance, however, later emphasized that regardless of its negative stance as to digital currencies, their underlying technology is to be considered separately.

“We see the convenience and usefulness of the blockchain technology for e-commerce, so we think the technology shall have a permission to develop,” the ministry’s press center replied to the query by ForkLog.

However, the new edition of the Code still implies administrative liability for issuance and operation with money surrogates. Still, digital currencies and operations therewith are subject to all exceptions provided by the draft law’s authors.

According to Vladimir Pligin, the head of the Duma’s committee for consititutional legislation and nation building, the draft Code was subject to extensive discussion prior to submitting. From January 20 to February 13, meetings with the government representatives, representatives of the Russian Supreme Court, General Prosecutor’s Office, the Central Bank and other entities will be held.

“We believe that the new edition of the Code will be reviewed in the first reading as early as this February,” Pligin says as quoted by RIA Novosti.

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