Russia Gives Cryptocurrency Legal Status

On July 22nd, the Russian parliament signed into law a bill that regulates cryptocurrency transactions. Two days later, the cryptocurrency law was then approved by the Russian Federation Council and the regulation will commence on January 1st, 2021.

What is the regulation?

The law defines cryptocurrency as “an aggregate of electronic data capable of being accepted as the payment means, not being the monetary unit of the Russian Federation or a foreign state, and as investments”. In Lehman’s terms this means that the new law prohibits crypto to be a means of payment in Russia for goods and services. Owners of cryptocurrency such as Bitcoin and Ethereum are going to be obliged to declare their assets to local authorities or suffer from heavy penalties. 

Despite this, digital currency will have rights to comprise money claims, exercise under securities and has legitimacy to engage in equity of private companies. Furthermore, following the new year, Russian banks will be capable of exchanging digital financial assets contingent upon they register with the central Bank of Russia. This implies that Russia’s central bank will be a major industry regulator and officially authorized to oversee crypto-related activity. 

Moreover, this legislation will allow small businesses to issue stablecoins. This type of digital currency is one linked with fiat currencies like the $USD or Russian Rouble. This enables Russia to launch these coins and exchange them for foreign digital assets. 

Overall, this law is elevating and legitimizing digital currency on a mainstream scale. However, it may be limiting the overall freedom of owning crypto such as Bitcoin as paying for Russian goods and services would be prohibited. 

Do you feel these regulations are elevating digital currency or do you feel it may be limiting its power?


Image: Dimitrosevastopol

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