Russia’s federal tax service weighed in on the subject of cryptocurrency legality this week when it released a document confirming that digital currencies are indeed legal to own and use inside the Russian Federation. In its assessment, the tax services declared that cryptocurrencies are viewed as foreign currencies, and that transactions using those currencies are monetary transactions. Under Russia’s current monetary control system, that also means that digital currency transactions are not subject to financial reporting requirements.
For now, this appears to be a victory for Russia’s digital currency community, and a welcome respite after several years of policy uncertainty. The Russian government’s position on Bitcoin and other digital currencies has been difficult to decipher for some time now. Concerns over cryptocurrency’s potential disruption to the ruble and the Russian economy have at times spurred the country’s leaders to extreme positions like proposing legislation to imprison Bitcoin miners and users.
Some officials have cited Article 27 of Russia’s Federal Law as justification for banning digital currencies, since that law declares the ruble to be the only official currency for the country. The tax service directly addressed that argument by declaring that there is nothing in Russian law that even attempts to define terms like cryptocurrency or virtual currency. It also confirmed that the law contains no legal prohibitions on digital currency transactions for Russia’s citizens.