Last week, the Russian Finance Ministry, in conjunction with the Ministries of Economic Development, Communications, Internal Affairs and Financial Monitoring, issued draft legislation amending existing Russian law to prohibit the distribution, creation and use of virtual currencies. The draft law:

• Amends Russian Federal Central Bank law to:
  • Allow the Russian Central Bank to determine what information constitutes causing the creation of “money substitutes and/or operations using “money substitutes,” and
  • Define “money substitutes” as “monetary units and objects of property rights, including in electronic form, used as a means of payment and (or) exchange and not covered by the federal law,” and prohibit their introduction into Russia.
•  Amends Russian Federal Information law to prohibit the distribution of information that allows the creation of “money substitutes” and/or operations using “money substitutes”
• Amends the Russian Code of Administrative Violations to impose significant monetary penalties on:
  • The creation of “money substitutes,”
  • The creation or distribution of software to create “money substitutes,”
  • The deliberate spreading of information that causes the creation of “money substitutes” and/or operations using “money substitutes,” and
  • Conducting operations with money substitutes.”

If passed, the draft legislation appears to prohibit virtually any activity involving virtual currency in Russia. Unofficial translations of the draft legislation and the regulatory impact assessment accompanying it are provided for informational purposes only.