Putin Signs Law Banning Digital Asset Payments in Russia

Key Takeaways:

  • A law prohibiting the use of Bitcoin and other digital assets in Russia has been signed by Vladimir Putin.
  • The new law will become effective ten days after it is published in the Russian official press.
  • Although “monetary surrogates” have been outlawed, Russian legislation does not specifically forbid payments made with digital assets as of yet.

Just as things appeared to be looking up for the Russian crypto business with the Bank of Russia’s central bank moving in the direction of a supportive -crypto stance, the president of the nation signed a law outlawing cryptocurrency payments there.

Digital financial assets (DFA) and digital utility rights (DPR) cannot be used as a form of payment in Russia, according to the law that was signed.

Anatoly Aksakov, the chair of the State Duma committee on the financial industry, presented the document for review on June 7. The current legal framework does not expressly forbid using such assets as a means of payment.

Russian officials have previously stated that UDR only applies to certain tokens, while DFA covers cryptocurrencies. The new “On Digital Currency” bill, intended to close the regulatory gaps, will be examined by Russian legislators this fall.

Although the “On Digital Financial Assets” law, which took effect in January 2021, provided two legislative requirements, Russia has not yet widely regulated cryptocurrencies. Russian officials have previously stated that while UDRs are applied to different tokens, DFAs include cryptocurrencies. In order to close regulatory gaps, Russian lawmakers will consider a new measure titled “On Digital Currency” this fall.

According to the document, “Except as otherwise provided by federal laws, it is prohibited to transfer or accept digital financial assets as consideration for transferred goods, performed works, or rendered services, or in any other way that permits one to assume payment for goods (works, services), by a digital financial asset.”

The agreement requires DFA exchange operators to decline transactions where it is feasible to use such assets as a substitute for money in addition to forbidding the use of DFA and DSM as payment for goods and services.

The document expresses a caveat that the restriction may be lifted in circumstances covered by federal law. Ten days following its official publication, the law will become effective.

The law forbids direct payments made using digital financial assets, and it also requires exchange platform providers to refuse any transactions that would result in the use of DFAs to replace the Russian ruble as a means of payment. Simply put, this implies that cryptocurrency brokers who facilitate payments are now governed by the national payment system, placing them under the control of the nation’s financial regulator.

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