New law clarifies legality of crypto in Russia

President Vladimir Putin has signed a law regarding the regulation of DFA transactions

Image of the President of Russia, Vladimir Putin
This new law provides much-needed clarity regarding the status of cryptocurrencies within Russia

The President of Russia, Vladimir Putin, signed a law last Friday regarding the regulation of digital financial asset (DFA) transactions.

The new law has been posted on the Russian Government’s official portal for legal information here.

RIA Novosti, a Russian media outlet, reported that the bill was first approved by the State Duma, on July 22, followed swiftly by the Federation Council on July 24.

The law will be implemented next year on January 1, 2021.

The DFA law provides a legal definition to all digital currencies, so that the assets are recognised as forms of data. However, it is not classified as the monetary unit of Russia or of a foreign state and they are not counted as investments.

In addition, the law stipulates that digital currencies cannot be used to pay for goods and services.

Another Russian media outlet, TASS, reported that the law explains these digital financial assets as digital rights that comprise of money claims, the ability to exercise rights under negotiable securities, the capacity to participate in the equity of a non-public stock company and the capacity to claim the transfer of negotiable securities that are set in a resolution on the DFA issue.

These digital assets can be sold, purchased, exchanged and pledged; however, they cannot be utilised as a means of payment.

The publication emphasises that the Bank of Russia (BOR) is the entity that is authorized to maintain the list of information systems as well as the list of operators of digital financial assets exchange. The BOR is also responsible for supervising the business of information system operators.

RIA Novosti also reported that individuals and legal entities within the country are capable of challenging crypto transactions in court, provided that they have declared these transactions as well as their possession of the cryptocurrency.

Several crypto-adjacent terms were removed from the final bill at the end of the second reading, like “token” and “mining.” The head of the State Duma Committee on the Financial Market, Anatoly Aksakov, revealed that further elaborations on local crypto regulations will be added in a bill to follow, which is expected to be adopted sometime in the autumn session.

Russia’s official stance on cryptocurrencies is uncertain, as some regulators propose a blanket ban on digital asset trading even as the country is far along the path of crypto adoption. It is hoped that this law, as well as the subsequent bills, will lend clarity to the local regulatory framework for the crypto industry in the future.