Crypto as a payment means will become illegal in Russia as from 2021, following the signing of a bill into law by President Vladimir Putin.
The move serves as a middle ground between the central bank’s clamor to make crypto transactions illegal and the more moderate wishes of crypto proponents in the country.
Russian authorities, however, have a more favorable disposition towards blockchain with the novel tech recently playing a role in deciding a constitutional amendment.
Crypto Banned as Payment Means from 2021
According to Russian media outlet RIA, President Putin signed a bill on Friday outlawing cryptos as payment means in Russia. The new law which comes into effect in 2021 allows transactions via regulated digital financial assets (DFA).
As previously reported by BeInCrypto, reports of a possible crypto payment ban in Russia have been circulating since late 2019. Earlier in June, BeInCrypto also reported that Russia’s first cryptocurrency law was imminent.
Commenting on the decision, Anatoly Aksakov, head of the State Duma Committee on the Financial Market remarked that the government defines cryptocurrency as a means of savings, investment, and payments.
Since these tokens are not monetary units of Russia’s fiat currency, Aksakov said the government felt it was incumbent to prohibit their use in payment settlement.
Despite the new law, citizens who declare their crypto holdings can challenge any restrictions in court, reports the RIA. State officials and other persons prohibited from owning foreign bank accounts are also prohibited from possessing cryptocurrencies.
Central Bank to Oversee Crypto Transactions in the Country
While the new bill bans crypto payments, Russian companies can now issue DFAs under approval from the Bank of Russia. According to the bill, these assets can function as a medium of exchange for another type of asset.
Commercial banks and fintech companies can also operate digital asset exchanges under license from the central bank as well. The Bank of Russia will reportedly monitor all such transactions in a dedicated ledger domiciled with the Apex bank.
Apart from licensing exchanges, the central bank will also evaluate DFAs to ascertain their suitability for investment by qualified investors.
The newly signed law does not cover matters relating to mining and utility tokens. According to Aksakov, the government plans to publish a detailed crypto regulatory framework later in 2022.