President Vladimir Putin of Russia has signed a new law that will prohibit the use of cryptocurrency as a payment means in the country by 2021. Meanwhile, the Russian government recently deployed blockchain technology for its constitutional amendment.
Crypto as Payment to Become Illegal in 2021
According to a report by local news outlet RIA on Friday (July 31, 2020), the bill signed by President Putin will prevent citizens from using crypto to pay for goods and services in Russia. The bill will, however, enable transactions via digital financial assets (DFA).
Also, government officials and other individuals barred from having overseas accounts cannot own cryptocurrencies.
Speaking on the new bill, Anatoly Aksakov, the head of the State Duma Committee on the Financial Market, commented that the Russian government defined crypto as means of savings, payments, and investment. This law effectively protects the primacy of the Rubble as the only legal tender in Russia.
Although the new law has been approved by the government, a part of the article states that:
“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.”
As reported by CryptoPotato back in May, Russian lawmakers proposed a bill make that would effectively make the issuance and trading of cryptocurrency illegal. The proposal further sought to slap offenders with a fine of up to two million rubles and jail time. Not long after, there were reports that the State Duma was reportedly looking at removing criminal implications from the proposed bill.
Bank of Russia to Oversee Digital Asset Transactions
While the new bill will see a ban on the use of crypto as a payment means, it allows companies to issue DFAs following approval from the Bank of Russia. Russian commercial banks and other companies can also operate DFAs under the purview of the country’s central bank.
These tokenized securities are exchangeable for other assets with all such transactions monitored and approved by the central bank. The Bank of Russia will develop modalities to evaluate these DFAs to determine if they are suitable for investment. However, just like with cryptocurrencies, DFAs cannot serve as payment means.
While the Russian government does not seem to embrace cryptocurrency, the attitude towards blockchain technology is different. The government employed blockchain for its constitutional amendment, which will decide if Putin gets a third term in office.