Russia has confirmed that as of July 1, 2027, direct peer-to-peer cryptocurrency transactions between individuals will be prohibited. Residents will need to conduct transactions through approved intermediaries.

According to the updated guidelines issued by the Russian Central Bank on October 12, individuals will still be able to directly trade cryptocurrencies with each other until the deadline; after that, such transactions will no longer be permitted, in accordance with Federal Law No. 282- FZ.

The central bank also made it clear that individuals are not allowed to transfer cryptocurrencies from their digital accounts to non-hosted wallets. Transfers between individuals through the addresses of regulated digital custodian institutions are also prohibited.

These restrictions will affect the way Russian traders buy, sell, and transfer cryptocurrencies. However, the country has already established a regulated market, where approved banks, brokers, and exchange operators are able to provide trading services.

What does Russia's P2P cryptocurrency ban mean for traders?

Currently, Russian cryptocurrency traders who directly buy and sell digital assets with other individuals will be forced to use approved intermediaries after the deadline in July 2027 takes effect.

P2P Transactions usually allow the buyer and seller to agree on the price and settle directly. Sometimes, platforms that connect traders are utilized, but they do not act as the main buyer or seller.

The new framework does not allow individuals to continue such transactions merely through third-party markets. According to the central bank's explanation, transactions between individuals will no longer fall within the permitted scope of cryptocurrency operations.

In its place, residents must trade with or through institutions recognized by Russian law, including registered cryptocurrency trading operators and brokers.

The law assigns different responsibilities to these institutions. Exchange operators can use their own funds to buy and sell digital currencies, while brokers act as intermediaries to match transactions for clients.

When Russia opened its regulated cryptocurrency market on September 1st, it had already established the framework for these services.

According to previous reports by crypto.news, non-qualified investors can purchase qualified cryptocurrencies worth up to 300,000 rubles per year after passing the necessary knowledge tests through each approved intermediary.

Qualified investors are also required to complete the test, but they are not subject to the same annual purchase limits.

The Russian Central Bank has listed Bitcoin, Ethereum, and USDT as one of the assets that may meet the requirements for ordinary investors, provided that the applicable trading rules are met.

Therefore, these restrictions do not prohibit cryptocurrency investment per se, but rather set conditions on who can facilitate transactions, which assets investors can buy, and how individuals can enter the market.

Can Russian cryptocurrency holders still use self-hosted wallets?

The central bank's latest guidelines also cover another aspect of cryptocurrency holdings: restricting transfers from regulated digital accounts to wallets that are directly controlled by individuals.

According to Article 31 of Federal Law No. 282- FZ, individuals are not permitted to transfer cryptocurrencies from their digital accounts to their own non-hosted wallets.

This type of wallet allows users to manage their private keys on their own, without relying on exchanges or other custodians to hold their assets.

The explanation from the regulatory authorities means that transferring cryptocurrencies purchased through regulated accounts to personal self-hosted wallets does not fall within the permitted withdrawal methods for individuals.

However, the guidelines do not explicitly state that merely holding existing hardware or software wallets is prohibited. They are aimed at specific transfers and transactions, therefore distinguishing between independently holding cryptocurrencies and transferring assets from regulated accounts.

The Russian framework requires digital custodian institutions to be responsible for recording cryptocurrency holdings and processing eligible transfers.

The central bank has established rules for digital custodian institutions, which include capital requirements ranging from 50 million to 250 million rubles, depending on the services they provide.

These institutions keep records of clients' assets and their related addresses.

The central bank further clarified that even if transfers originate from transactions between individuals, direct transfers between individuals conducted through the management addresses of these custodian institutions are not allowed.

Therefore, these restrictions cover both withdrawals from regulated accounts to individual unmanaged wallets, as well as transfers between individual customers within regulated managed infrastructure.

How will traders access regulated cryptocurrency exchanges in Russia?

Russia has begun to authorize financial institutions and cryptocurrency companies to provide services under the new licensing framework.

On October 6th, the central bank registered the first batch of cryptocurrency exchanges and digital custodian institutions, which included several established financial firms.

The first batch of registrations includes 4 exchange operators and 5 digital custodian institutions.

The bank VTB was listed in two different registries, while Russia's largest lending institution, the Savings Bank Sberbank, initially obtained authorization to operate as a digital custodian.

According to Interfax, on October 12th, Sberbank received approval for a separate cryptocurrency trading service.

This line plans to launch its first batch of cryptocurrency products on December 1st, with expected supported assets including Bitcoin, Ethereum, and USDT.

Sberbank indicates that these services will be provided through existing platforms, including SberBank Online, SberInvestments, and SberBusiness.

VTB indicates that the company plans to offer digital currency trading services to investors through its investment platform as early as November, and to launch its own cryptocurrency exchange in December.

These institutions will operate in accordance with the rules related to cryptocurrency trading, asset recording, and customer transactions.

According to the crypto market legislation approved in July, the Central Bank of Russia is responsible for supervising participants and maintaining a registry of approved enterprises.

The regulatory agency announced on October 6 that registered companies must comply with trading and accounting requirements from the date of approval, while the remaining compliance obligations must be fulfilled by September 1, 2027.

What happens to cryptocurrency transfers outside of Russia?

Russian residents can still conduct cryptocurrency transactions involving overseas markets through regulated channels, but the law sets different conditions for individuals and enterprises.

According to the explanation of this framework by the Russian Central Bank on July 21, residents can use foreign bank accounts to conduct cryptocurrency transactions overseas.

Cryptocurrencies purchased in China can be transferred overseas through regulated intermediaries, while holdings recorded abroad must be declared to the Russian tax authorities.

Laws handle commercial cross-border transactions in different ways.

Russian exporters and importers are allowed to use cryptocurrencies in foreign trade settlements and are not subject to the same restrictions faced by ordinary retail investors.

The central bank stated that eligible foreign trade transactions can be conducted through intermediaries, or they can also be completed directly using various cryptocurrency wallets and digital currencies.

Domestic payments are still subject to another ban, which means that residents cannot use cryptocurrencies to purchase goods or services within Russia.

The outside world is still questioning how the authorities will effectively enforce restrictions on direct transactions and self-hosting.

Industry executives interviewed by Cointelegraph previously questioned how difficult it would be in practice to prevent people from exchanging cryptocurrencies outside of centralized platforms.

Jan3 CEO Samson Mow believes that P2P cryptocurrency transactions are less subject to regulatory restrictions compared to activities conducted through centralized exchanges.

A senior executive from the hardware wallet company SatoshiLabs, Stepan Uherik, pointed out that restrictions on mobile wallet applications may not necessarily prevent people from accessing funds through desktop software and hardware wallets.

However, none of these views can constitute an exception under Russia's new law.

In October, the Russian Central Bank's guidelines cited Article 30 of Federal Law No. 282- FZ, as the legal basis for terminating direct cryptocurrency transactions between individuals starting from July 1, 2027.