September 24, 2023

Russian State Duma Adopts Law Banning Digital Asset Payments

A law banning the use of digital assets for payments has been adopted by the State Duma, which is the Russian parliament’s lower house. In order to implement this law, the exchange operators in the country have been obligated to reject transactions that would make it impossible for people to use digital financial assets for payment purposes.

No payments with digital assets

The Federal Assembly in Russia’s lower house is called the State Duma and its majority has given its support to a bill aimed at banning the use of digital financial assets to pay for goods and services in the country.

The legal term used to refer to cryptocurrencies in Russia is digital financial assets or DFAs for short. This is applicable until the dedicated draft law called ‘On Digital Currency’ is reviewed and then adopted by lawmakers in Russia. This law has been designed for regulating the crypto space in the country more comprehensively. The ban would also be applicable to tokens and utilitarian digital rights.

The implementation of the measure would mean that platform operators like exchanges refuse to process any DFA transactions that are made for payment purposes. Operators of investment platforms and token issuers would also have to make it impossible for their users to alter records when conducting transactions with digital assets.

Implications of the law

It should be noted that utility tokens can be used for making some payments that are permitted under other federal laws. According to the legislation, the operators of platforms dealing in digital financial assets would also be subject to the national payment system of the Russian Federation. This means that their names would have to be added to a special register that the country’s central bank maintains.

Even though institutions in Moscow have different opinions about the treatment of cryptocurrencies in the country, they are agreed on one thing; these digital financial assets should not be used for payments. They are in agreement that the Russian ruble should be the only legal tender in the country, along with its digital counterpart, when it is launched.

But, the Central Bank of Russia (CBR) had been heavily opposed to the use of cryptocurrencies in any way until recently. Now, the Bank of Russia said that it could support the legalization of crypto for making international payments.

The newly adopted law had been submitted to the State Duma in the middle of June. Russian officials are hoping that it would help in eliminating the use of these digital financial assets in place of money. Apart from that, there is another piece of legislation that is still being reviewed in parliament. This is aimed at bringing about administrative liability for issuing and exchange of DFAs illegally.

The Bank of Russia has softened towards cryptocurrencies because of the sanctions that the country is dealing with in light of its invasion of Ukraine. Otherwise, it had been heavily opposed to cryptocurrencies, believing them to be a threat to the country’s financial system.

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