Putin signs Russian Crypto Bill, bans crypto from being used as payment

Vladimir Putin signed a Crypto bill today that addresses the legality of cryptocurrencies within Russia. The law prohibits crypto from being used as payment.

By · Aug 1, 2020 . 6min read

Vladimir Putin
Source – Scmp.com

Vladimir Putin signed into law today a Crypto bill that would make using cryptocurrencies’ payment as illegal. The Russian Ministry of Justice and Ministry of Economic Development were both unhappy with the bill.

Russian authorities initially wanted to make all activities related to cryptocurrencies illegal. The version of the bill that Putin signed, however, is not as strict. It still recognises cryptocurrencies as an asset that can be taxed. Individuals can pledge their digital assets as collateral and exchange them for another type of digital asset. Crypto financial assets, on the other hand, will not enjoy the same level of rights as their digital counterparts.

The law defines digital currencies as a set of electronic data that can be accepted as a means of payment but is not a monetary unit of Russia. Cryptocurrencies, however, are defined as a means of investment and savings, but can not be used to purchase good and services within Russia.

The law will be applicable from January of next year. Russian businesses can use blockchain to issue digital currencies. They must obtain permission from the Bank of Russia first. Only qualified investors will be eligible for registration, along with confident unqualified individual investors. A Russian lawmaker told the press that the government is working on a more specific bill that will bring about more clarity to the situation. The current bill did not refer to essential terms such as ‘token’ and ‘mining’.

Russians will be able to challenge the law in court if they have previously declared these digital assets and the transactions made using them. However, owning any cryptocurrency is strictly prohibited as they are previously banned from maintaining any foreign accounts.

Russia Entities backlash the Crypto Bill

Many Russian entities such as the Chamber of Commerce and Industry have sent letters in protest of the new law. Russians against the bill have commented on how the regulations will effectively cut the country off from global tech infrastructure. It will also force young Russian tech professionals to leave the country for better opportunities.

The International Digital Economy Organization, a cryptocurrency advocacy group, sent a letter to the Russian parliament. It suggested in the letter that Russian authorities should regulate cryptocurrencies like they would any other economic activity. They ought to only ban the use of cryptocurrencies to conduct illegal activities.

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