Author

Pavel V. Novikov

Browsing

This article was first published in ‘INSOL World’, The Quarterly Journal of INSOL International, on 18 June 2021. The full issue is available to INSOL members, accessed here. Introduction As in other jurisdictions, Russia’s insolvency legislation is based on the pari passu principle. However, this principle is subject to certain exceptions, specifically with respect to shareholders and other non-arm’s length creditors, such as the controlling persons of an insolvent company (“Affiliated Creditors”). In practice, Affiliated…

General context

The statutory regulation of cryptocurrency in Russia is yet to be made compatible with the current dynamics of digital assets.

In 2014 the Central Bank of Russia warned potential users about the absence of legislative control over virtual currency. The Central Bank stressed the fact that transactions with cryptocurrency are based on speculative premises and thus involve a substantial risk of depreciation and financial losses. It was also mentioned that due to the anonymity of cryptocurrency issuance, users may become unintentionally involved in illegal activities such as money laundering and terrorism financing.

This position was later supported by the Bank in 2017 when, despite admitting the increasing interest in cryptocurrencies in Russia, it was pointed out that the circulation and the usage of cryptocurrencies as well as any financial instruments nominated or associated therewith poses legal and technological risks.

In 2018 the president of Russia instructed the government to determine the definition and status of cryptocurrency, as well as to introduce relevant registry and taxation systems. As a result of the said orders, on 20 March 2018 a draft Law on Digital Financial Assets was introduced to the State Duma. It contains regulations of the mining process, defines the pecuniary status of cryptocurrency, crypto wallets and tokens. So far the draft is still being negotiated in parliament.