By Shelly Melancon (Switzerland)
Russia’s president, Vladimir Putin, has signed a bill prohibiting the use of digital currencies for payment. As per the new legislation, digital asset service providers must decline any request for payment in virtual currencies.
As a result, all exchange platforms are to adhere to the legal category assigned to cryptocurrencies called “monetary surrogates.”
Digital Financial Assets (DFAs) are Barred in Russia
According to the latest legislation signed by President Putin, a direct restriction is placed on DFAs as a means of payment. The local news outlet, RBC, reported that the country’s new bill is set to end crypto-asset transactions.
Despite not regulating the crypto industry, the “Digital Financial Assets Laws” were implemented in January 2021. The law mentioned above is to oversee the activities of the Russian crypto space.
The country has been a haven for crypto mining for some time now. Due to some legal gray areas, the Russian central bank has previously called for comprehensive industry regulation.
Meanwhile, Russian government officials have reiterated that the DFAs are cryptocurrencies, while the utilitarian digital rights (UDR) deal with some specific tokens.
However, a regulatory gap exists that the Russian government has not adequately addressed before the total ban. RBC reported that Russian officials would attempt to correct the previous abnormalities regarding crypto regulations this fall.
Furthermore, lawmakers filed the new legislation in the lower Russian house of parliament before being approved by the president.
It is worth noting that until now, no Russian law has outlawed crypto payment. However, the use of “Monetary Surrogates” was wholly prohibited to preserve the status of the Russian Ruble.
The ban surprised many, considering the role of cryptocurrencies in easing transaction challenges caused by Western sanctions. However, the exciting thing is that the Russian Ruble has gained significant value despite the heavy economic sanctions.
DFA Payment Subject to Change
Amid the international community’s monumental financial restrictions slammed on Russia, talk of legalizing crypto payment is ongoing. There is a proposal to permit small-scale crypto asset payments by Russian business partners, which is gaining traction.
Meanwhile, the newly signed bill has banned DFA payments, leaving room for further interpretation under federal laws. The new movement to legalize crypto payments between trading partners and Russia is gaining momentum in Moscow.
Not only did the new law ban payment in cryptocurrency, but it also forbade crypto service providers from processing transactions. This decision is to protect the country’s national currency as the only official legal tender.
Decision-makers see DFAs as potential disruptors to the traditional fiat system in place. As a result, the new law restricts their continued use.
With the signing of the new bill, it is expected that it will come into effect ten days after the official announcement.
RBC further reported that the exemptions from applying the DFA ban are subject to interpretation by legal experts. The content of the new bill is said to have some highlighted controversies that need some ironing out.
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