At the end of May, it became known that a set of amendments to the laws on digital financial assets and digital currency is being prepared in Russia. Due to the controversial wording, this may lead to the fact that the courts will be able to recognize in—game currencies as real digital ones,” he said in a comment for Roman Lukyanov, Managing Partner of Semenov &Pevzner Law Firm.

What does it threaten?

Spoiler: if desired, game developers can really be found guilty of illegal circulation of digital currency, according to the criminal code, and imprisoned for up to five years.

And now for a detailed legal comment about what kind of amendments are currently being prepared in Russia.

Roman Lukyanov
First, you need to understand that we are talking about a set of bills, and not about any one bill:

  • about the draft Federal Law “On Digital Financial Assets and on Amendments to Certain Legislative Acts of the Russian Federation“;
  • about the draft Federal Law “On Digital Currency and on Amendments to Certain Legislative Acts of the Russian Federation
  • and also about two separate draft Federal laws concerning amendments to the Code of Administrative Offences of the Russian Federation and the Criminal Code of the Russian Federation.

Secondly, all the uncertainty stems from the terminology proposed in the projects.

We will not consider the draft Federal law “On Digital Financial Assets” separately now, because it does not follow from it that it can somehow affect the gaming industry. But with the rest, everything is much more complicated.

Federal Law “On Digital Currency”

According to the proposed terminology of the bill, digital currency means:

  • a set of electronic data (digital code or designation) contained in an information system that is offered and (or) accepted as a means of payment that is not an official monetary unit of the Russian Federation, a monetary unit of a foreign state and (or) an international monetary and settlement unit, and (or) as an investment and in respect of which there is no person who is obligated to each owner of such electronic data, with the exception of the operator and (or) nodes of the information system, who are only obligated for compliance with the procedure for issuing these electronic data and performing actions in their relations to make (change) entries in such an information system with its rules.

In short, digital currency = data that you can pay with, although they are not the monetary unit of any country. At the same time, the absence of a person who owes something to the owner of this data is recognized as an important quality of a digital currency.

Most of the critical comments regarding the amendments under consideration concern just the definition of a digital currency. Is the in-game currency (diamonds, coins, etc., for which the player can purchase certain in-game content) a means of payment?

Let’s try to figure it out.

The means of payment is an instrument of counter-provision in the economic relations of subjects. Given the uncertainty of the legal status of in-game content, in-game currency from this point of view can, of course, be equated to a digital currency.

That is, as a player, I earned a certain number of “coins” during the gameplay and use them as an in-game means of payment for the purchase, for example, of new weapons, new animation, etc. That is, in exchange for some electronic data (in-game currency), I (the player) receive other electronic data.

From the point of view of this criterion, other game elements can also fall under the term digital currency (for example, experience points – they can be used to acquire new skills, i.e. to acquire new electronic data for the gameplay).

The second feature that characterizes digital currency: “the absence of a person who is obligated to each owner of such electronic data, with the exception of the operator and (or) nodes of the information system, who are only obligated for compliance with the procedure for issuing these electronic data and performing actions in their relations to make (change) entries in such an information system to its rules.”

Let’s omit the part that concerns nodes – this is still a rather specific thing. Let’s make a reservation that a fairly large number of gaming products represent an information system (in the sense in which this term is used in Russian legislation). At a minimum, any game that has an online element is an information system.

Of course, there is no obligated person in front of a player with in-game currency (no one owes anything to such a player by default). At the same time, almost any game product has a conditional operator, which, among other things, is responsible for the order of making /changing records in the information system according to its rules (including if these records are generated by an automated algorithm) about such a currency: how many conditional coins should a player have if he completed a conditional quest or how many he has the currency should decrease if he bought a new in-game item, etc.

Meanwhile, the bill refers to an operator who, in addition to the function of ensuring compliance with the actions for making (changing) records (about in-game currency) in the information system, is also obliged to comply with the procedure for issuing electronic data (in-game currency).

The issue of digital currency means, among other things, actions using the Russian information infrastructure or using user equipment (located in the Russian Federation) aimed at using digital currency by third parties.

That is, if some Russian server, communication channel, database is used during the game and there are conditional coins in the game, then this is a sure sign that the in-game currency can be qualified as a digital currency.

To summarize – the current version of the bill on digital currency allows you to recognize the in-game currency as a digital currency with all the consequences.

It is clear that the authors of the bill hardly wanted this (most likely, they simply did not even take this aspect into account). It is clear that if the law is adopted in such an edition and a court related to a gaming product happens, most likely, it will not recognize this as a violation (although this is not an indisputable thesis). But the very fact that in-game currency can be equated with digital currency is alarming.

Draft Federal law concerning amendments to the Criminal and Administrative Codes

In its official review, Skolkovo criticized, first of all, these amendments in relation to the gaming industry.

Draft articles 14.56.2 of the Administrative Code of the Russian Federation and 187.1 of the Criminal Code of the Russian Federation do not limit the scope of these articles to digital assets and digital currency at all. These articles are about digital rights.

This is a rather complicated situation. The articles talk about the fact that digital rights are “issued” and “circulated”. Moreover, it is not at all necessary that these digital rights are somehow related to digital assets or digital currency. So, if, when issuing/handling these digital rights, they are carried out using an information system that does not meet the criteria established by the laws, then liability (administrative or criminal) ensues.

Here, the field for holding a developer, publisher or other person involved in ensuring the functioning or distribution or maintenance of a gaming product accountable is incredibly wide. And these norms, of course, pose a danger in the current edition for the gaming industry.

Important remark: above I considered a simple situation with a simple in-game currency. If it’s something complicated, where in-game currency can be used to pay for something very real – everything is bad here in general

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