What Is Digital Currency Under Russian Law and How It Differs from Bitcoin

Russian legislation uses the term ‘digital currency' instead of “cryptocurrency’. The law defines it as a ‘set of electronic data (digital code or designation) in an information system that can be accepted as a means of payment or as an investment’, while such a currency has no single obligated person (issuer). It is precisely decentralized crypto assets such as Bitcoin and Ether that fall under the definition of digital currency in Russian law. In simpler terms, Bitcoin and other popular cryptocurrencies in Russia are officially recognized as ‘digital currency’, but not as a monetary unit or legal means of payment.

Definition and Legal Status of Digital Currency in Russian Law

Federal Law No. 259-FZ (‘On Digital Financial Assets, Digital Currency…') introduced the concept of digital currency and established its legal framework. Cryptocurrency is not regarded as money or a security but as property. This means that citizens are legally allowed to own, buy, sell, and exchange digital currency like any other property. Such assets can be gifted, bequeathed, and inherited, and transactions with them are legally equivalent to property transactions, with all the associated tax consequences.

However, the law sets strict restrictions: the use of cryptocurrency as a means of payment for goods, work, or services in Russia is prohibited. In other words, paying with Bitcoin in a store or an online service in Russia is illegal. Public advertising of cryptocurrency payments is also banned.

Legal Status

By recognizing cryptocurrencies as property, owners can protect their property rights. Amendments were made to a number of laws to ensure that digital currency is considered an object of civil rights (property). At the same time, digital currency is not legal tender and is not backed by the state or an issuer. The Central Bank of Russia and the government in general treat it with caution: ownership is not banned, but the infrastructure for its circulation within the legal field is very limited.

What Are DFAs and Why They Are Not Cryptocurrency

Digital Financial Assets (DFAs) are a separate concept introduced by the same law. Essentially, DFAs are digital rights to certain values, issued as tokens in an information system. For example, DFAs may certify the right to claim a debt, the right to participate in a company’s capital, or other property rights. The issuance and circulation of DFAs are strictly regulated: they can be issued only by a legal entity or individual entrepreneur through a special platform — an operator of an information system included in the Bank of Russia’s register. In simple terms, DFAs are akin to digital bonds, shares, or utility tokens issued under the regulator’s permission.

The key distinction between DFAs and cryptocurrencies is the presence of an identified issuer and regulatory oversight. The state controls the issuance and circulation of DFAs, while cryptocurrencies circulate in a decentralized manner without a single center. Importantly, most well-known cryptocurrencies (Bitcoin, Ether, etc.) do not fall under the definition of DFAs. The law explicitly categorizes them as ‘digital currency’. Neither Bitcoin nor other classic cryptocurrencies have an issuer, a legally formalized issuance decision, or a platform approved by the Bank of Russia, so they are not considered DFAs.

Main differences between DFAs and cryptocurrencies (digital currency) under Russian law:

• Issuer and issuance: DFAs are issued by a specific issuer (company or sole proprietor) under a legally registered decision. Cryptocurrencies like Bitcoin have no issuer — their issuance is decentralized across the network, without a legal entity.
• Trading platforms: DFAs circulate on licensed platforms listed in the Bank of Russia’s special register. For cryptocurrencies, no legal (regulated) exchanges exist in Russia — trading occurs only on foreign or unofficial platforms.
• Regulation: The issuance and circulation of DFAs are fully subject to Russian law (259-FZ and Central Bank acts). Cryptocurrencies, however, lack comprehensive regulation — their legal regime is still forming and exists only within the general framework of digital currency law.
• Use for payments: DFAs are not a payment method (they are meant for investment). Cryptocurrencies are explicitly banned as a means of payment within the country.

Thus, DFAs are closer to digital securities under state supervision, while Bitcoin and other cryptocurrencies, under Russian law, are treated as digital currency — i.e., property circulating without official authorization or guarantees.

Bitcoin vs. Digital Currency: The Status of Bitcoin in Russia

Bitcoin, as the first and most famous cryptocurrency, is not explicitly named in Russian laws but clearly falls under the definition of ‘digital currency’. This means that in the eyes of the law, Bitcoin is property, a digital commodity that can be bought and sold but not used to pay for goods and services in Russia. Bitcoin has no official issuer, its network is decentralized, and therefore it is not regulated by the Bank of Russia as a financial instrument. There are no legal Russian crypto exchanges where Bitcoin can be traded for rubles — transactions are possible only on foreign platforms or via direct P2P deals.

Nevertheless, owning Bitcoin is not prohibited: it is protected by law as property, and operations with it are subject to taxation on general grounds (for example, selling at a profit requires paying personal income tax).

It is important to note that recognizing Bitcoin as property also entails obligations. Russian residents earning income from cryptocurrency trading must declare this income and pay profit tax, as with property rights. There is no special chapter in the Tax Code yet, but in practice, tax authorities treat income from crypto sales similarly to income from other property. Individuals holding large amounts in digital currency are also obliged to comply with notification requirements (the procedure for reporting digital currency holdings to tax authorities is set separately).

Summary on Bitcoin

In Russia, Bitcoin is recognized as digital currency (property). It can circulate freely in private transactions but does not have the status of legal tender or access to regulated markets. Its value is determined entirely by supply and demand on global crypto markets, and the state does not bear responsibility for Bitcoin holders’ risks.

Stablecoins (Case of USDT) and Their Legal Status

Stablecoins, such as USDT (Tether), whose value is pegged to the US dollar, deserve special mention. At first glance, USDT is also a cryptocurrency (digital currency), just a more stable one. However, from a legal perspective, USDT does not fully fit into either the DFA or digital currency categories. The reason is that USDT has a private issuer — Tether — that promises to redeem tokens for actual dollars (though without guarantees). Under Russian law, DFAs must certify a specific legal right, while digital currency has no responsible entity. USDT occupies an intermediate position: it is not a DFA (it doesn’t certify a right to an asset under the law) and at the same time is pegged to real currency.

For Russian residents, this means that USDT enjoys no special legal recognition. It is viewed as a foreign digital asset — essentially property — but its legal circulation in Russia is limited. Recently, the Bank of Russia established criteria for admitting foreign digital rights (assets issued abroad) to the Russian market, and USDT does not meet them — in particular, due to the issuer’s ability to block tokens and lack of equal obligations to all holders. According to lawyers, it is impossible to legally trade USDT on Russian platforms. Russian operators also cannot issue DFAs backed by USDT.

In practice, however, many Russians continue to use stablecoins through foreign exchanges or swaps. Such operations occur outside Russia’s legal framework — effectively in a ‘gray zone’. Buying or selling USDT with personal funds is not a crime, but investors do so at their own risk. In case of disputes or token loss, they cannot seek protection in Russian courts, since USDT is neither officially recognized nor regulated. Moreover, any payments in stablecoins within Russia fall under the general ban on cryptocurrency payments. Thus, for Russian residents, stablecoins mainly serve as a store or transfer of value (especially for cross-border payments), but not as legal tender or financial instruments.

Tax aspects:

USDT transactions are not separately classified — if a person profits from buying/selling a stablecoin, it is treated as property income and taxed accordingly. Exchange rate differences when converting USDT into rubles may create taxable income that must be declared. There is no direct monitoring of such operations yet, but future requirements for reporting digital currency holdings (including stablecoins) for tax purposes are possible.

Comparative Table: Digital Currency vs. Bitcoin vs. USDT

‘Spot the Difference’ — Quick Quiz for Readers

Which of the following statements is true?

A. Under Russian law, Bitcoin and Ether are considered types of digital financial assets (DFAs).

B. Using cryptocurrency for purchases in Russia is prohibited by law.

C. Stablecoin USDT is officially admitted for trading on Russian exchanges as a digital right.