Russia is making it almost impossible for its citizens to trade or send cryptocurrency abroad with new legislation “legalizing” digital assets.

A bill regulating coin transactions in the country is set to hit the floor of the State Duma within days. It brings restrictions, penalties and fines.

The framework will also prevent global crypto platforms from operating in the Russian market unless they submit to Moscow’s control.

Russians to have access to a handful of coins

Russia is preparing to introduce long-awaited rules for cryptocurrency operations. The country’s finance ministry announced the respective bill will be filed with the lower house of parliament next week.

While the legislation is expected to legalize digital currencies like Bitcoin and permit ordinary Russians to trade them, access to the market will be strictly controlled and limited.

The bill is building a “cage for investors,” the Russian edition of Forbes noted in an article. Most people may forget about buying and selling cryptocurrencies the way they are used to.

In the future, coin transactions will be processed only by service providers that Russia deems legal and compliant with its anti-money laundering laws.

Russian banks will be banned from making payments to foreign crypto platforms such as exchanges, unless these are channeled through a licensed local intermediary.

While qualified professional investors will be able to trade almost any currency, regular citizens will be permitted to touch only a few coins, approved based on their liquidity and market capitalization.

They will be allowed to spend no more than 300,000 rubles a year on crypto through a single intermediary. Yuri Brisov, partner at Digital & Analogue Partners, summed up for Forbes:

“A whitelist of 5 to 10 major cryptocurrencies is expected – most likely Bitcoin, Ethereum, possibly Solana, and TON. 300,000 rubles at the current exchange rate is approximately $3,700. This amount can buy about 0.04 BTC.”

Rule breakers to face fines and prison terms

The draft law, which implements a regulatory concept presented by the Bank of Russia at the end of last year, was recently greenlighted by the government commission on legislative activity. It must be adopted by July 1 at the latest.

A supplementary bill will introduce financial penalties for those who violate the established crypto rules. Citing knowledgeable sources, the RIA Novosti news agency provided details in its own report.

The upcoming amendments bring fines for intermediaries trading with non-qualified investors in excess of the 300,000-ruble threshold – between 700,000 and 1 million rubles (approx. $12,000).

Besides the administrative punishment, entities involved in illegal activities, including mining, will be subject to criminal liability, with prison terms for their owners and representatives.

The digital currency involved in such operations may be seized and confiscated, as it’s already recognized as property under Russia’s criminal and criminal procedure codes.

The bottom line is that to avoid trouble, Russians must conduct all their coin-related transactions through organizations registered or licensed in the country. Viktor Pershikov, a crypto market analyst, elaborated:

“Accordingly, any activity outside this perimeter is effectively classified as a violation, even if the transaction itself, for example, the sale of cryptocurrency, is not prohibited.”

Moscow leaves few options for Russian crypto users

Besides as an investment tool, cryptocurrency has been widely used by Russians to transfer money abroad and make international payments, since their banks were placed under Western sanctions.

The popular scheme of exchanging rubles for a stablecoin like Tether and then withdrawing the amount to a foreign bank account will simply cease to be viable for most people, experts say.

Peer-to-peer trades will not work as Russian banks won’t process payments to unlicensed platforms and foreign exchanges, and all transactions above 100,000 rubles will be closely monitored.

The legal option of using licensed exchanges is limited to 300,000 rubles per year and foreign crypto platforms may refuse to accept cryptocurrency transfers from Russia, just like with Iran or North Korea, except those operating in few “friendly” nations such as Kyrgyzstan, Kazakhstan, or Belarus.

“An iron curtain is descending on the crypto market,” the Russian-language Forbes remarked, while noting it is being dropped by both sides.

Major global exchanges have already pulled out of the Russian market. The leader, Binance withdrew in 2023, following Moscow’s invasion of Ukraine the previous year. OKX quit ruble transactions around the same time, and Bybit closed its P2P market for transactions involving fiat payments from Russian banks.

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