Borrowing money and refusing to repay? Russian Constitutional Court: Must repay!

It all started with a dispute that we in the crypto are all too familiar with—the USDT lending dispute.

Fast forward to 2023, a Moscow resident lent out 1,000 USDT. When the loan matured, the borrower defaulted. Left with no other option, the lender sued in court, demanding the return of the USDT. However, the lower court dismissed the claim, citing the simple reason that USDT is not included in Russia's "Digital Financial Assets Law," and therefore is not considered a legally recognized digital financial asset and is not protected.

Seeing this, many Chinese crypto players will likely empathize – isn't this the common predicament they encounter? When disputes arise with their crypto assets (loans, theft, inheritance), seeking redress in court often results in rejection due to a lack of clear legal basis, leaving them with no recourse but to suffer in silence.

The Russian Constitutional Court's ruling directly overturned the lower court's decision, providing three core conclusions that completely dispelled the misconception that crypto assets are not protected by law, and also provided a reference for the global crypto:

1. Legally acquired crypto assets are not merely digital symbols, but legally protected property—like houses and money, they possess independent property attributes;

2. You don't need to wait for specific laws to explicitly list them. As long as you acquire crypto assets legally, you enjoy equal protection under the Constitution and civil laws. Don't worry about not being protected if the law doesn't specify it.

3. Crypto assets can go through inheritance, mortgage, and recovery processes normally. If disputes arise, creditors can protect their rights through litigation, and the court can enforce the judgment in accordance with the law.

Many people in the crypto start to fantasize about the freedom to trade cryptocurrencies after seeing that "crypto assets are legal"—don't misunderstand! Russia's actions are not about letting everyone trade cryptocurrencies freely, but about building a complete system of first establishing rights and then regulating them. This is essentially consistent with our country's core orientation of cracking down on illegal transactions and preventing financial risks.

It is understood that Russia is advancing a special regulatory framework, which is expected to officially take effect in 2027. The core rules are categorized by participant type, and those in the crypto can refer to them.

• Ordinary players must first pass a risk awareness test to prove that they have the ability to identify and bear risks. The annual purchase limit for crypto assets is approximately $4,000 (300,000 rubles, approximately $3,918), and they can only trade "whitelisted currencies" approved by the Central Bank of Russia. Unregistered currencies and highly speculative Altcoin are strictly prohibited from trading.

• Qualified investors and institutions with sufficient financial strength and risk management capabilities can trade a wider range of currencies and trading models, but they must fulfill stricter information disclosure and risk reporting obligations and be subject to full supervision.

• Exchanges must register in Russia and obtain a financial regulatory license to operate legally. Exchanges that are not registered or operate illegally will face fines at best, and those responsible will be held criminally liable at worst. This regulatory logic is almost identical to that of China's crackdown on illegal cryptocurrency trading venues.

In short, Russia's approach is to first clarify that legal holdings are protected, and then draw red lines that cannot be crossed, thus protecting legitimate rights and preventing financial risks, and bringing crypto assets from the gray area onto the track of the rule of law.

Russia's actions are not accidental; the core is to solve its own practical problems. The logic behind it can help Chinese crypto players understand the global regulatory trends of crypto assets and avoid many pitfalls.

Due to international sanctions, Russia has been excluded from the SWIFT clearing system, making cross-border trade settlements and fund transfers extremely difficult—costly, inefficient, and frequently subject to government restrictions. Cryptocurrencies like Bitcoin and USDT, being decentralized and easily circulated across borders without relying on the traditional financial system, can serve as a backup tool to help Russia overcome blockades and ensure asset liquidity.

Here's the key point: For Russia, the core value of crypto assets lies in value transfer, not speculation. This reveals a core logic: the importance that countries place on crypto assets stems from their technological features serving practical needs, rather than from speculation driving market trends.

Similar to China, Russia is seeing a surge in cryptocurrency holdings, leading to a rise in disputes related to lending, transfers, and inheritance. Previous specific laws did not cover all types of crypto assets, resulting in inconsistent court rulings and leaving many with no recourse. This ruling clarifies the property rights of crypto assets from a constitutional perspective, providing a unified basis for court decisions and demonstrating the principle of "judicial intervention first, followed by legislative improvement," thus addressing the difficulties in protecting rights crypto.

First, let's establish a bottom line: China's regulatory approach to crypto assets is fundamentally different from Russia's, and China will not simply copy Russia's model. However, Russia's rulings and regulatory logic can offer Chinese crypto investors three highly practical insights, each related to your asset security and legal recourse.

Current domestic regulatory policies focus on combating illegal transactions and preventing risks, explicitly prohibiting the issuance, financing, and speculative trading of virtual currency tokens. However, there are no specific provisions for the protection of civil rights for "legally acquired crypto assets" (such as those legally gifted or inherited). This is why many people face difficulties in protecting their rights.

Russia's experience tells us that even without legalizing cryptocurrency trading, legally held assets can be protected through judicial means. For Chinese crypto investors, the key is to safeguard the legal acquisition process.

If your crypto assets were obtained through pyramid schemes, fraud, or illegal transactions (such as buying and selling on unlicensed exchanges), your rights will certainly not be protected by law. However, if they were legally acquired, you can try to protect your rights through civil legal channels in the future if you encounter disputes related to loans, inheritance, etc. This is the foundation and bottom line for protecting your own rights.

The rapid pace of technological iteration in the cryptocurrency market makes it difficult for dedicated legislation to keep up. New currencies and trading models are constantly emerging, making comprehensive legal coverage challenging. Russia's "judicial first" approach, establishing core rules through rulings by the highest judicial body before gradually refining legislation, is likely to become a global trend.

For Chinese crypto investors, instead of constantly worrying about when specific legislation will be enacted in China, a more practical approach is to pay close attention to cryptocurrency dispute cases handled by domestic courts, analyze the courts' reasoning, clarify the boundaries of their own actions (such as which actions might cross the line), and proactively mitigate legal risks. This is far more effective in protecting their assets than simply waiting for legislation.

Although Russia has recognized the property rights of crypto assets, it has not relaxed its supervision. Instead, it has strengthened risk control through tiered management and licensing, which is entirely consistent with our country's approach to preventing and resolving financial risks.

Remember this: No matter how global cryptocurrency regulations change, risk control remains the core of regulation in all countries and is crucial for us players to protect our assets. As crypto players in China, you must adhere to compliance principles, stay away from unlicensed and illegal exchanges, avoid unregistered Altcoin, do not participate in pyramid schemes or fraudulent cryptocurrency projects, and avoid blindly using leverage to speculate in cryptocurrencies to prevent losing everything. At the same time, properly preserve relevant evidence of the legal acquisition of cryptocurrency assets (such as gift agreements, inheritance certificates, etc.). Even if the protection of legal assets in China increases in the future, assets acquired or traded illegally will never be protected by law.