A session of the ‘Young Lawyers of Russia’ advocacy group discussed the legal aspects of cryptocurrencies.

In his opening remarks, Sergey Bruyev, the session moderator, Chairman of the Board of the ‘Young Lawyers of Russia’ advocacy group, asked those present to discuss whether it was legal for citizens of Russia to launch, buy and sell cryptocurrency, to raise funds through ICO, and whether individuals and legal entities may legally use smart contracts. He noted that venture investors were very careful in their work with cryptocurrencies and ICO: “The mechanism appears simple but there is no protection against risks.”

Anton Guglya, co-founder of the Cryptoacademy, said that introducing blockchain required changing business processes and the costs of tuning a business will be higher than introducing cryptocurrency. As for smart contracts, this is a computer protocol with a set of conditions (a single condition or a ‘tree’ condition) that self‑exercise in the real world. Implementing it on the Internet of Things is interesting. Mr. Guglya also believes that, in the immediate future, there are very few businesses capable of working in a smart contract system. Currently, there are no legitimate legal grounds to use cryptocurrency in Russia. Cryptocurrency cannot be legally converted into real money in Russia.

Ilya Alembaev, senior partner at Versus.legal, drew the audience’s attention to the question “Is it legal to mine cryptocurrency?” Private law tells us that everything that is not prohibited is allowed. The question with cryptocurrency mining is not clear. Does mining fall in the ‘entrepreneurship’ category? In theory, such activity should be regulated and revenues subject to taxation. He believes that a decentralized economy generates a large number of new processes that legislature regulates as they emerge and accumulate. To regulate these processes adequately, the development of the entire legal and judicial sector needs to be monitored closely. The state must protect its social and national interests.

Elina Sidorenko, Leader of the Work Group for the Assessment of Risks Associated with Cryptocurrencies at the State Duma of the Federal Assembly of the Russian Federation, covered various aspects of and problems involved in introducing blockchain in Russia. She believes cryptocurrencies may be used in Russia, but the country is not ready yet. Various countries have their own “anti‑laundering laws”. The crypto environment is only just being created globally. The international community does not provide a template for developing a common platform. There are contradictions in understanding the nature of cryptocurrencies and tokens and in understanding why we need them. Ms. Sidorenko believes that the question “Is a smart contract a contract?” requires a special volume (chapter) to be developed in the Civil Code of the Russian Federation for courts to be able to render informed judgments. Officials also need to be taught to work with blockchain, Ms. Sidorenko believes. In conclusion, she invited all those interested to take part in the First International Legal Forum on blockchain to be held on 1–2 March supported by Vnesheconombank.

Anton Sviridenko, Advisor to the Commissioner for the Russian President for Entrepreneurs Rights, told the audience that Boris Titov was a proponent of introducing and spreading blockchain in Russia. This is a gateway to the future. Even though different government bodies take different approaches to the issue, the legal vacuum needs to be eliminated and cryptocurrency needs to be used in the interests of Russia. Boris Titov’s team proposes using the so-called “legal sandbox” for all parties concerned. Cryptocurrency circulation needs to be allowed but it is still too early to make it legal tender, since it involves risks for the national currency. Blockchain terminology should be defined and enshrined in law. Mr. Sviridenko believes that using cryptocurrency to bypass the sanctions and create an alternative global financial system is very promising.