Russia Ministry of Finance proposes amendments on digital currency ban

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The issue of digital currency regulation in Russia took another turn this week, with news the Ministry of Finance is seeking to amend the law “On Digital Financial Assets,” just a matter of months after it was passed.

The Ministry proposed a series of amendments to the new law which would have the effect of introducing a “blanket ban on any operations with virtual money for individuals and individual entrepreneurs,” save for in three circumstances—inheritance, bankruptcy and law enforcement proceedings.

This would allow for assets to be passed on to beneficiaries in the case of inheritance, or to be seized for the benefit of creditors in the event of bankruptcy. Similarly, for proceeds-of-crime style law enforcement operations, digital currency could still be seized by the authorities under the new proposed legislation.

The amendments would mean block reward miners would be prevented from receiving payment for their mining activity, despite mining itself being legal.

“Standalone crypto mining is legal, but it loses its financial value because the payment is usually processed in [BTC] and Ethers.”

The development is the latest twist in Russia’s regulatory debate around digital currency, and comes just weeks after the original DFA bill was passed into law in July 2020. That follows on from a protracted struggle between lawmakers, with several u-turns in policy direction throughout the process.

The DFA bill is expected to come into force in early 2021, and will have the effect of banning all digital currency payments in Russia. The new proposals would form a new, separate law, to be known as the Digital Currency Bill, which would not pass the parliamentary process until later this year.

The example of Russia shows the struggles authorities have in developing effective systems of regulation for digital currency, which continues to pose technical challenges for lawmakers.