COMMENT: Russian govt to deny cryptocurrencies are money in apparent plan to prevent legal quandaries

By Andrei Skvarsky.

The Russian government is apparently resorting to verbal manipulation to rule out legal quagmires that might arise if a Russian bill of December 2017 to allow cryptocurrency deals becomes law – problems that could be caused by the rouble’s status as the only legal tender within Russia.

Plainly speaking, it seems the idea is to deny that cryptocurrencies are money – the bill defines cryptocurrencies and all other “digital financial assets” as “property [imushchestvo] in electronic form”. But the tactic might well cause more problems than it would solve.

The bill, which appeared in two nearly identical versions, one written by the Finance Ministry and the other by the central bank, reaffirms the legal tender rule by saying that “digital financial assets shall not be a legal means of payment” on Russian territory.

But as lawyer Roman Yankovsky, secretary of FinTech Association, a Russian group working for the digitisation of the country’s financial services, argued at a recent conference in Moscow, the apparent cryptocurrency demonetisation tactic might cause some legal tangles.

“Owners of digital financial assets,” says the Finance Ministry version of the bill, “have the right to perform transactions of exchanging digital financial assets of one type for digital financial assets of another type and/or transactions of exchanging digital financial assets for roubles, foreign currency and/or another form of property.”

First of all, exchanging an amount of cryptocurrency for a “form of property” actually means paying for that property with cryptocurrency. Replacing the word “exchanging” with the word “paying” does not change the substance of this type of transaction.

Secondly, money, as Yankovsky pointed out, is defined as a form of property in Russian law. Article 130 of the Civil Code, for example, puts money among forms of movable property.

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