Legalization of Cryptocurrency: State Duma Approves Law on Digital Currencies

The legalization of cryptocurrency in Russia has received a key formalization: the State Duma has adopted in the third reading the federal law "On Digital Currencies and Digital Rights," which transitions the crypto market from a less defined regime to a system with rules for operations, requirements for investors, and a list of organizations permitted to work with digital currency. This is not about a closed list of coins: various crypto assets, including Bitcoin and Ethereum, may fall under the norms if operations meet the criteria established by law.

What the New Law Changes

The document, comprising 287 pages, establishes the status of cryptocurrency as a monetary value. Owners of such assets will have to notify the Federal Tax Service about the opening of crypto wallets and report on operations in cases provided for by law. Income from cryptocurrency operations must be declared, and individuals must account for personal income tax; failure to pay taxes will result in liability under tax regulations.

In the new model, cryptocurrency is considered not as regular money or a security but as a separate digital currency. This is important for market participants both from an investment perspective and from an accounting perspective: such an asset in accounting will require clear rules for reflection and control.

For the financial market, these norms are also important because digital currency enters a regulated environment. For the economy, the effect may be dual: businesses and individual investors receive clearer rules for accounting and access to infrastructure, but at the same time, the requirements for reporting, identification, and operation control increase. The Bank of Russia, that is, the Central Bank, remains the key institution in the oversight system for money, currency, and financial instruments. After passing the legislative procedure, documents of this level are signed by the President of the Russian Federation, Vladimir Vladimirovich Putin.

Who Will Be Able to Work with Digital Currency

The law identifies five categories of regulated participants in the digital currency market:

• Exchanges.
• Brokers.
• Management companies.
• Depositaries.
• Exchange offices.

After the transition period, operations with cryptocurrencies will have to go through such organizations and banks.

Separate rules for access for qualified and unqualified investors are specified. An unqualified investor will be able to purchase digital currency through one intermediary for an amount up to 300,000 rubles per year. For qualified investors, there is no limit on the volume of operations.

Legal exchange and withdrawal of cryptocurrency into rubles will be tied to a permitted intermediary:

• Choose a bank or regulated organization through which operations with digital currency are allowed.
• Undergo identification and provide documents requested by the intermediary.
• Conduct the exchange or sale of digital currency according to the rules of the chosen platform.
• Receive rubles through the banking infrastructure and keep confirmations of the operation for accounting and reporting.

Organized Trading and Transition Period

The new procedure describes how organized trading of digital currencies should be conducted, as well as how to account for and store them. Trading is recognized as organized if two or more transactions are conducted in a month with a total amount exceeding 3.5 million rubles.

Market participants have been given time to adapt: the transition period will last until July 1, 2027. From September 1, the main norms of the law should come into effect: the status of digital currency, requirements for market participants, accounting, and reporting. Until July 1, 2027, the market will adapt to the new regime, and after this date, operations with digital currencies can only be conducted through regulated organizations and banks.

The rules affect not only settlements within the country but also the use of digital currency in foreign economic activity. For ordinary users and investors, legalization means a clearer but more formal scenario: transactions will have to be conducted through permitted intermediaries, accounting for limits for unqualified investors, keeping confirmations of operations, and fulfilling tax obligations. The main risks are associated with violations of limits, reporting, and conducting operations outside the regulated infrastructure after the transition period.

The document has been adopted as bill No. 1194918-8 "On Digital Currencies and Digital Rights."