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Cryptocurrency Today: Putin signs law forbidding use of digital assets for payments in Russia

16-Jul-2022 By: Sudeep Saxena
Cryptocurrency Today

Cryptocurrency Today: Putin signs law forbidding use of digital assets for payments in Russia

A measure prohibiting the use of digital financial assets in payment has been signed into law by Russian President Vladimir Putin. The law requires exchange operators to refuse to accept transactions that facilitate the use of DFAs, a legal classification that presently includes cryptocurrencies, as "monetary surrogates."

According to the cryptocurrency section of a Russian newspaper, Russian President Vladimir Putin has approved a bill restricting the use of digital financial assets (DFAs) as a form of payment within his nation. The ban also applies to utilitarian digital rights (UDRs) as well.

Russia has not yet completely regulated cryptocurrencies, despite the fact that the law "On Digital Financial Assets," which went into force in January 2021, introduced the two legal terms.  Russian government representatives have previously said that whereas UDR only applies to some tokens, DFA covers cryptocurrencies. This fall, Russian lawmakers will consider the new "On Digital Currency" bill, which aims to solve the regulatory loopholes.

The law that the Russian president has just endorsed was submitted to the State Duma, the lower chamber of the Russian parliament, by Chairman of the Financial Market Committee Anatoly Aksakov on June 7 and adopted a month later. Although "monetary surrogates" are prohibited and the ruble is recognized as the only form of legal currency, until today, Russian legislation did not expressly prohibit payments made with digital assets.

Despite the fact that the measure prohibits the exchange of DFAs "for transferred products, performed works, or provided services," it leaves the door open for situations in which DFA payments are permitted under other federal statutes. A proposal to legitimize small-scale crypto payments in overseas commerce with Russia's partners has been gathering favor in Moscow amid rising financial restrictions imposed as part of Western sanctions over the invasion of Ukraine.

In addition to prohibiting direct payments using digital financial assets, the law also mandates platform owners who provide exchange services to turn down any transactions that would result in the use of DFAs in place of the Russian ruble as a means of payment.

The new law will go into effect ten days after it is published in the official Russian gazette. According to the sources' assessment , Russian legal experts have already called attention to a few issues with the document's exemption provision.

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