What the Bill Does

Russia's State Duma passed the first reading of bill No. 1194918-8, titled 'On Digital Currency and Digital Rights,' with 327 of 340 deputies voting in favor on April 22. The legislation creates a framework covering how digital currencies can be issued, traded, and stored. If adopted, the law takes effect July 1, 2026, with some provisions carrying later implementation dates. The bill follows Russia's sweeping push to formalize crypto oversight, a project building since the domestic payment ban of 2021.

Five categories of participants must obtain Bank of Russia (BoR) licenses to operate: exchanges, brokers, management companies, depositories, and exchangers. The BoR gains authority to set transaction limits, impose compliance requirements, and determine which assets retail investors may access. Digital currency is formally classified as property under the bill, meaning holdings can be recognized in legal disputes including bankruptcy and divorce proceedings.

Retail Caps and the Cross-Border Carve-Out

The ban on using digital currency for domestic payments, in force since 2021, stays in the new legislation. The ruble remains Russia's sole legal tender for internal transactions. Cross-border settlements are explicitly permitted, however. Supporters argue this provision offers Russian firms a route for foreign trade transactions outside dollar-denominated banking under current sanctions conditions.

Non-qualified retail investors must pass a test and are capped at 300,000 rubles (approximately $4,000) per year through a single intermediary. They may only purchase assets the BoR classifies as sufficiently liquid: a two-year average market capitalization above 5 trillion rubles ($66.6 billion), daily trading volume above 1 trillion rubles ($13.3 billion), and a trading history of at least five years. A broader ban on direct peer-to-peer transactions takes effect in 2027, with payment blocking and blacklisting enforcement expected before that date.

Criminal Penalties Stall

Two companion bills establishing criminal liability for violations were introduced alongside the base law. Russia's Supreme Court declined to support one of them, finding the penalties framework 'drafted as a blanket provision' dependent on base legislation that has not yet been adopted. The court called the criminal bill premature. The State Duma Committee on Financial Markets separately called for clearer rules around non-custodial wallets and stronger legal protections for privately held assets before the second reading. The base law still requires two more readings in the Duma, followed by Federation Council approval and presidential signature.

Why It Matters

Russia's legislation is being reported as legalization. What it actually creates is a surveillance and licensing layer over every transaction, with self-custody restricted, retail access capped, and the Bank of Russia sitting at the top of the permission stack. Industry participants inside Russia have already warned this pushes users further underground rather than surfacing them. That is not a Moscow-specific result. Any regulatory regime that treats access to your own assets as a privilege granted by a licensed intermediary produces the same outcome everywhere it is applied. The companies most vocal about 'regulatory clarity' in the Bitcoin and crypto industry are typically those positioned to absorb compliance costs as a barrier to competition. That is a moat strategy wearing a policy argument as a disguise. The users who need financial access most are the ones this structure prices out first.