Russia is set to prohibit crypto payments next year, following a new law signed by the president. This stems from the gov’t recent statement that the legalization of crypto activities poses certain risks. However, as an alternative, the law endorsed transactions with so-called digital financial assets (DFA), which are tokenized securities.
Crypto payment ends in Russia
Following the report from a Russian news outlet, RIA, the country’s president, Vladimir Putin, signed the new bill on Friday. The law becomes effective by 2021 and would prohibit local cryptocurrency traders or users from purchasing goods and services in the country using cryptos.
Additionally, the bill put forward that individuals and government officials banned from creating or owning foreign accounts cannot own digital currencies either. Amongst other concerns, the prohibition of crypto payments, as proposed in the bill, tends to ensure that Rubble, the country’s Fiat currency, stands as the only legal tender.
Not only as a means of payment, the Russian government sees digital currencies as another means to savings and investment, according to the head of the State Duma Committee on the Financial Market, Anatoly Aksakov. The bill effectively aims at protecting the only legal tender, Rubble. However, the report further noted:
Russian individuals and legal entities will be able to challenge transactions with digital currency in court only if they have declared these transactions and the very possession of cryptocurrency in Russia.
DFAs, not crypto
While crypto payments become illegal in Russia by 2021, the bill enabled the issuance of DFAs, however, under the supervision of Russia’s central bank. With the central bank’s approval, other commercial banks and companies can operate DFAs as well. Unlike cryptos that can serve as a payment method, DFAs can’t be used to pay for goods.