Cryptocurrency holders in Russia now face a new hurdle when contesting their blockchain property rights in courts. Per a recent understanding of federal legislation, citizens must first register their digital assets with the Federal Tax Service (FTS) for their claims to be adjudicated in court. It is claimed that without this declaration, courts are barring legal crypto-related claims. Legal practitioners in the field argue that this form of compliance is nothing short of a violation of basic constitutional guarantees of access to justice.
RBC reports claim that the justification for this demand comes from Part 6 of Article 14 of the Federal Law “On Digital Financial Assets.” This segment grants Russian courts the right to adjudicate crypto disputes provided the claimant has filed their crypto wallet and transaction details with the FTS. Nevertheless, the heavy complication in this legal framework is the absence of an official procedure for this mandatory notification to the FTS that has been formally sanctioned or issued by the relevant authority. In the absence of a reporting process, cryptocurrency proprietors will find the pursuit of legal remedy difficult.
Litigator Marat Amanliev has taken steps in the form of a complaint with the Constitutional Court of the Russian Federation to appeal against the requirement. Amanliev’s steps come after a court exercised jurisdiction over an abstract crypto-related dispute, which deprived the court of jurisdiction due to the absence of a notice to the FTS. Amanliev argues that ‘the law’ as it is fashioned and enforced does not enable Russian citizens to access courts, which fundamentally undermines the constitutional law provisions on jurisdictional access to courts ostensibly providing judicial protection.
Constitutional Rights Disputed
Marat Amanliev expounded his argument with respect to the contemporary legal reality. He advocated the following position: “Consequently, compliance with such a requirement is impossible, which makes it impossible to exercise the right to judicial protection.” In essence, his claim revolves around the fact that the absence of an approved notification system makes compliance with the system almost an automatic obstruction to accessing the legal remedy to the court in cryptocurrency cases. He explored constitutional issues related to the problem. In his words, “It should be noted that the right to judicial protection cannot be limited under any circumstances.” This highlights the point where cryptocurrency holders are deemed to be protected in irony because they cannot defend themselves within the system because of the pragmatic compliance requirement inertia of contemporary legislation.
The attorney made a point to analyze other asset classes concerning their legal standing. He pointed out that, unlike traditional assets like real estate or vehicles, where citizens have the right to assert their ownership regardless of the state’s acknowledgment—albeit, there are processes for such assets—cryptocurrency holders are denied the same protection. This differentiates treatment under the law as restricting fundamental rights.
Challenge or Roadblock?
This current lawsuit stems from a southern country’s attempt to warm up to cryptocurrency formally. Russia permitted certain types of crypto activities, such as mining and cross-border payments, in 2024 and started implementing a new tax regime for digital assets. However, it appears that there are some inconsistencies in the implementation of these policies. For example, while mining was legalized, it faced bans in certain alpine regions suffering from energy shortages.
A similar paradox is emerging within the crypto tax and judicial framework. Lawyers argue that a prerequisite for granting basic legal rights requiring notification to a state body, without a functional approved method enabling individuals to comply with the requirement, is a fundamentally unconstitutional approach. As explained by Amanliev, the challenge of the issue pivots around the difference between proclaiming possession of assets for informational purposes and paying taxes on income or profit assets yield.
The current dispute is not about people concealing unpaid taxes associated with their crypto; it is about people being actively prevented from even being able to legally defend their claim, as there is no procedure available to report their crypto holdings to the FTS and therefore, justice is being obstructed in a technical manner.
