After many years of restrictions, Russia is deregulating cryptocurrency and joining the global crypto industry
Russian President Vladimir Putin recently proposed legislation to permit cryptocurrency trading. He indicated the measure could take effect in January 2021.
The new framework still prohibits using cryptocurrency to pay for goods and services within Russia, but it creates a significantly more open regulatory environment for trading, investing, and issuing digital assets.
Under the law approved by Parliament, digital currency is defined by the Russian government 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”.
While cryptocurrencies cannot be used for everyday purchases, investors are allowed to buy, sell, and pledge these assets.
The Russian news agency TASS described such instruments as:
“Digital financial assets (DFA),… are digital rights comprising money claims, ability to exercise rights under negotiable securities, rights to participate in equity of a non-public stock company and right to claim transfer of negotiable securities set in a resolution on the DFA issue.”
The law also bans advertising for crypto payment platforms in Russia.
Tokens may only be issued by financial institutions that comply with the regulations set out in Russian law. Acquiring crypto through foreign exchanges remains legal, but domestically issued tokens must follow the established process.
Fast to react
Soon after the law passed, Sberbank — Russia’s largest bank — began exploring a stablecoin tied directly to the Russian ruble.
Sergey Popov, an executive at Sberbank, said:
“We probably may issue a stablecoin on the basis of the law that has been adopted recently. As we can peg this stablecoin to the ruble, this token could become a basis or an instrument for settlements involving other digital financial assets.”
Slow to adopt
Despite these regulatory changes, Russia’s approach may still fall short of what’s needed to encourage broad adoption compared with other nations that have moved faster.
Anti Danilevski, founder of KickEX.com, criticized Russia’s pace, noting:
“We are already lagging behind in the economy and only now are we taking tiny steps towards the adoption of crypto. We are behind in the crypto race in this sense. The train has already left.”
By contrast, China has widely implemented blockchain solutions across government agencies and businesses and is actively developing its central bank digital currency in the form of the digital yuan.