Putin signs law banning crypto-based payments in Russia

Russian President Vladimir Putin signed a law on July 14 banning the use of cryptocurrencies as a means of payment, the local news media RBC reported.

The ban applies to the use of digital financial assets (DFA) and utilitarian digital rights (UDR), which refer to tokens that give the right to benefits or services.

The law reads,

«It is forbidden to transfer or accept digital financial assets as consideration for transferred goods, work performed, services performed, as well as in any other way that makes it possible to assume payment for goods (works, services) of a digital financial asset, unless otherwise provided by federal law. “

The last clause provides an exception for DFA payments that may be permitted by federal law.

The legislation also imposes on crypto exchanges an obligation to reject transactions where DFA or UDR can be used as an alternative to money. In other words, crypto exchanges must ensure that no transactions take place where cryptocurrencies are used as payment for goods or services.

The bill was first presented in the State Duma, the lower house of the Russian parliament, on June 7 by Anatoly Aksakov, chair of the Financial Markets Committee. The law was approved by the Federation Council, the country’s upper house of parliament, and sent to Putin for consideration on July 8.

Although Russia does not yet fully regulate cryptocurrencies, the law “On Digital Financial Assets” introduced and defined DFAs and UDRs when it came into force in 2021.

Russian regulators are scheduled to review a new bill, “On Digital Currency”, later this year, which is expected to fill the gaps in regulation.

The legislation will enter into force 10 days after it is published in the Government Gazette, the RBC report states.

A change in attitude

Although the Russian central bank had been asking for a ban on cryptocurrencies for years, recent developments suggest that the bank may soften its stance.

In May, Russian Industry and Trade Minister Denis Manturov said the country would sooner or later legalize cryptocurrencies, Reuters reported.

In the same month, another Reuters report stated that the Russian Federation’s central bank was open to the use of cryptocurrencies for international payments.

In June, central bank governor Elvira Nabiullina said in an interview with RBC that cryptocurrencies can be used for international payments, provided that the assets do not “penetrate” the Russian financial system.