Legal guarantee of a transaction for crypto on the transfer of ownership
The question of the legal status of transactions using cryptocurrencies is one of the most exciting for people planning to seriously engage in trading in this market. Let’s be honest — crypto-anarchists trying to get rid of intermediaries of any kind are in the minority. Most people who come to the crypto market think about the guarantees of the safety of their assets from the state and the platform on which they trade and hold crypto. This issue has become even more acute in the Russian Federation after some foreign crypto exchanges such as Binance, Coinbase and many others began to restrict or even completely block users from Russia. Another reason for the relevance of this issue is the growing need to exchange cryptocurrencies for real assets.
Situation in Russia
In Russia, there has been legal uncertainty regarding cryptocurrencies for a long time. After the law on digital financial assets came into force, more clarity appeared: citizens of the Russian Federation cannot pay with cryptocurrency, but they can buy, issue, sell, and make other types of transactions with it.
Moreover, citizens of the Russian Federation may well count on state assistance in protecting their digital assets. For example, in April 2022, the district court in St. Petersburg allowed the investigator to arrest 4000 stolen ETH. Following the complaint of the victim, a criminal case was opened under articles on theft (part 4 of article 158 of the Criminal Code) and illegal access to computer information (under part 2 of article 272 of the Criminal Code).
Since cryptocurrency is recognized as property in Russia, we believe this makes barter transactions possible. Therefore, the exchange of cryptocurrency for real assets can be legally implemented in the Russian Federation as an exchange agreement with all the accompanying guarantees of the real world.
There are many reasons that indicate that favorable conditions for the crypto market are developing in Russia, including in legal terms. Recently, the Ministry of Finance finalized a bill under which digital currency can be accepted “as a means of payment that is not the monetary unit of the Russian Federation.”
The Ministry of Finance has long defended the position that transactions with cryptocurrencies should be taxed, not banned. Nevertheless, the requirements for exchange operators in the bill are severe: an exchange operator carrying out a sale and purchase on its own behalf must have a capital of at least 30 million rubles, and for a digital trading platform operator, the requirement is 100 million rubles.
If the strategy of the Ministry of Finance prevails over the strategy of the Central Bank in Russia (which is now mostly prohibitive), then it will only be a matter of time before trading real assets with the transfer of ownership for cryptocurrency, but very few platforms will be able to meet the minimum requirements.
Foreign practice
In one of our recent articles, we already wrote about the legal prospects of the crypto market in the realities of sanctions. Speaking directly about the transfer of ownership, there is often cause for optimism, especially when it comes to real estate.
For example, in the Portuguese city of Braga, a three-room apartment was bought for cryptocurrency without converting into euros. This transaction was made possible thanks to changes in the legal field that came into force in April 2022. Such a purchase can be called a historical one, as it involves the transfer of ownership of a physical asset bought for digital, without converting to fiat.
Dubai is known for its attractiveness as a cryptocurrency offshore. At the end of April 2022, DAMAC Properties, a large construction company founded by Hussain Sajwani, announced that it would soon begin accepting payments in BTC and ETH, helping customers convert fiat to digital currency if necessary.
Summary
If we are talking about the Russian Federation, then so far the most reliable way to obtain legal guarantees in a transaction in exchange for a cryptocurrency is a barter transaction. If in the future the line of the Ministry of Finance prevails in the Russian legal field, then the purchase of real assets with a direct transfer of ownership will become a reality. Requirements for platforms that can conduct such transactions are planned to be strict, however.
As for such operations abroad, it all depends on the specific jurisdiction. Attractive examples include Portugal or crypto offshore zones like Dubai, Zug or Cyprus.
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