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Russia set to legally prohibit use of cryptos as money

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The Draft Law

In a rather surprising turn of events, last week, the Russian Ministry of Finance proposed to “criminalise the circulation of money surrogates.” This surrogates included cryptocurrencies, reported Interfax. The Deputy Finance Minister Alexei Moiseev stated during the Vneshecnombank’s conference that the ministry has already prepared a draft bill on the criminal liability of the circulation of such surrogates.” Business FM further added, “The ministry assumes serious responsibility, right up to criminal ones, for arranging schemes, issuing money substitutes and receiving them…This concerns the payments in cryptocurrency.”

Moiseev however clarified that the law was not only targeted at cryptocurrencies. Rather, it reinstated that the Russian ruble stands as the only legal tender for the trade of goods and services. While money surrogates are prohibited, specified penalties for violations are yet to be decided. Business FM detailed that violation of this principle has gone unpunished for long, and the Finance Ministry has decided to fill the gap.

Cryptos not to be used as Money

The Ministry of Finance of Russia and the Bank of Russia have been undeterred in their stand toward cryptocurrencies being money surrogates, irrespective of the positive developments that digital currencies has brought to Russian lawmakers this year. The head of the central bank, Elvira Nabiullina, has repeatedly said that the regulator is against “cryptocurrency as private money and money surrogates,” Interfax described, adding that “under the definition of money surrogates there are also cryptocurrencies.” Moiseev expressed last week: “There is the ruble, and everything else is a surrogate.”

The Finance Ministry has proposed to legally prohibit use of virtual currencies for payments in Russia. Moiseev further clarified that certain companies that receive cryptos for payments convert them to rubles immediately. Such operations won’t be shut down.

The dominant and recurring justification for the proposed legislation was that “This is necessary to protect the ruble as the single legal means of payment in Russia.”

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