New law gives digital currencies legal status in Russia

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President Vladimir Putin has signed a bill recognizing digital currencies as a legitimate asset in Russia, but bans citizens from using digital coins to pay for goods and services.

Anatoly Aksakov, head of the State Duma Committee on Financial Markets, was quoted by news outlets saying, “The legislator defines cryptocurrency as a means of payment and as a means of savings, as an investment, but this means of payment is prohibited to be used to pay for goods and services in Russia.”

The bill also gives companies in Russia permission to tokenize their company and issue digital shares on a blockchain if they receive permission from the Bank of Russia. The bill is expected to become effective January 2021.

For several years, it was unclear whether digital currencies were considered legal or illegal in Russia. The bill that was signed on July 31 finally gives Russian citizens clarity on digital currencies; however, Aksakov said that the bill purposely avoids addressing concepts like digital currency ‘tokens’ and ‘mining.’ According to Aksakov, the Russian government plans to create more regulations around the digital currency industry in their autumn session and will pass a new bill that addresses both of these concepts.

Better than before

Although the new bill sounds strict, it is much better than the bill that was initially proposed. Originally, the proposed digital currency bill suggested that digital currency should be illegal in Russia and that any individual who violates the law should face up to 7 years in jail and fines up to $28,000. However, after undergoing a round of amendments made by the parliament last week, the Russian government has finally settled on a digital currency framework that is relatively more user-friendly than the bill that was initially proposed.