Russian President Vladimir Putin Signs Law That Bans Crypto Use for Digital Payments

The amended law arrives nearly seven months after Russia’s central bank called for a ban on using and mining crypto.

By Shomik Sen Bhattacharjee | Updated: 18 July 2022 11:20 IST

Russian President Vladimir Putin Signs Law That Bans Crypto Use for Digital Payments

Photo Credit: Facebook/ Vladimir Putin

The law bans the use of digital securities and utility tokens as a means of payment for goods, services

Highlights

The amended law is intended to safeguard Russians from threats
Russian officials, central bank have debated on crypto for months
Putin had earlier commented on Russia's advantage in Bitcoin mining

Russian President Vladimir Putin has signed into law a national ban on using digital assets for payments. Under the new law, digital assets and digital rights are no longer accepted as “monetary surrogates” and therefore cannot be accepted as payments for goods and services. Other monetary units are also banned, reaffirming the ruble's place as the only officially accepted currency within the Russian Federation. The action comes after the Russian government and central bank have long debated what to do about cryptocurrency.

The law, as published on the Russian parliament website and translated by Google Translate, reads, “It is prohibited to transfer or accept digital financial assets as a consideration for transferred goods, performed works, rendered services, as well as in any other way that allows one to assume payment for goods (works, services) by a digital financial asset, except as otherwise provided by federal laws."

Compliance will be ensured by holding exchange operators and businesses liable for any violation. Under Russian law such operators are considered "subjects of the national payment system" and must comply with regulations that, among other things, limit the kinds of transactions they are allowed to perform and forbid the provision of leverage and yield products to their customers.

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Financial assets may now be directly acquired by the Russian state without the involvement or consent of the exchange. Securities backing digital assets may also be legally terminated without notice to asset holders.

Back in January, the Bank of Russia proposed an outright ban on crypto—for payments or investments. The amended law, as it stands, doesn't go quite that far, although in February, Russia's Finance Ministry did submit a draft of cryptocurrency regulations to the government, which allows for investing in digital assets like Bitcoin or Ether, but not using them to buy things.

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Meanwhile, President Putin expressed enthusiasm for Bitcoin mining in January, when he said that Russia had "certain competitive advantages" including a “surplus of electricity and well-trained personnel available in the country” to mine the currency.

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