Federal Law 221-FZ: Russia's Crypto Rules and What They Mean for Users

When you hear Federal Law 221-FZ, Russia’s 2020 legislation that defines cryptocurrency as a financial instrument but bans its use as payment. Also known as Law on Digital Financial Assets, it’s the backbone of how Russia treats crypto—not as money, but as digital property. This law doesn’t stop Russians from owning Bitcoin or Ethereum. It stops them from buying coffee with it.

The real target of Federal Law 221-FZ, Russia’s 2020 legislation that defines cryptocurrency as a financial instrument but bans its use as payment. Also known as Law on Digital Financial Assets, it’s the backbone of how Russia treats crypto—not as money, but as digital property. is domestic financial control. Banks can’t process crypto payments. Merchants can’t accept it at the register. Even if you hold $10,000 in Bitcoin, you can’t use it to pay your rent in Moscow. But here’s the twist: the law makes an exception for international business transactions, cross-border payments using crypto between Russian entities and foreign partners under strict reporting rules. That’s why some Russian exporters still move crypto—just not inside Russia.

What about mining? The law doesn’t ban it. In fact, Russia became one of the top Bitcoin mining countries because of cheap electricity and lax local enforcement. Crypto mining Russia, the use of electricity to validate blockchain transactions and earn rewards, often bypassing financial restrictions is still alive and growing, especially in Siberia. And while the government talks about banning crypto entirely, it’s also testing a digital ruble—its own central bank digital currency. That’s not a coincidence. They want control, not elimination.

For ordinary Russians, this law created a gray zone. You can’t use crypto to pay bills, but you can trade it on exchanges like Binance or Bybit. You can’t buy a car with it, but you can send it to a friend abroad. And if you’re caught using it for domestic payments? You could face fines or even criminal charges under anti-money laundering rules. But enforcement is patchy. Many people just use peer-to-peer apps or crypto ATMs—where they exist.

The law also forced Russian crypto projects to either shut down or move offshore. Local exchanges had to stop offering fiat on-ramps. Wallets had to block domestic payment integrations. But innovation didn’t die—it just went underground. People still trade. Still mine. Still send crypto to family in Turkey or Kazakhstan. The law didn’t kill crypto in Russia. It just made it harder, riskier, and more secretive.

Below, you’ll find real stories and breakdowns of how this law shapes what Russians can and can’t do with crypto today. From tax traps to mining loopholes, from banned apps to offshore workarounds—these posts show the law in action, not just on paper.