No Bitcoin in Russia? Putin signs encryption ban

The legislation comes as a surprise after the central bank has shown signs of support for crypto payments in recent months.

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No Bitcoin in Russia?

Russian President Vladimir Putin signed a law on July 14 banning the use of cryptocurrencies like Bitcoin as a means of payment. The local news media (RBC) reports this.

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The ban applies to the use of digital financial assets (DFAs) and digital utility rights (UDRs) – ie tokens that offer the right to a benefit or service.

The law reads as follows:

“It is prohibited to transfer or accept digital financial assets in exchange for goods transferred, works performed, services rendered, or in any other way that allows acceptance of payment for goods (works, services) by a digital financial asset, unless federal provides otherwise. Law.”

The last clause allows an exception to DFA payments, which may be allowed under federal law.

The legislation also requires crypto exchanges to reject any transactions where DFAs or UDRs can be used in exchange for money. In other words, crypto exchanges must ensure that no transactions occur where users use crypto assets such as Bitcoin or Ethereum as a means of payment for goods or services.

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

Although Russia still does not fully regulate cryptocurrencies, the law “On Digital Financial Assets” introduces DFAs and UDRs.

Russian regulators are expected to review a new law “On Digital Currencies” later this year, which aims to fill the regulatory gaps.

According to the RBC report, the law will come into force ten days after its publication in the State Gazette.

The central bank changes position

Although the Central Bank of Russia has been calling for a ban on cryptocurrency in recent years, recent developments suggest that the bank may soften its position.

In May, Russia’s Minister of Industry and Trade, Denis Manturov, said that sooner or later the country will legalize crypto payments, Reuters reported.

A few days later, another Reuters report said that the Central Bank of the Russian Federation was open to using 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 as long as the assets are not “leaking” into the Russian financial system.

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Text credit: Cryptoslate