New Law on Digital Financial Assets and Digital Currencies: key innovations in Russia
01 December 2020
The law regulates the arrangements associated with the issuance and circulation of two objects –"digital financial assets" and "digital currencies", introducing, among other things, the following new concepts:
- "digital currency" is defined as a digital code used as a mean of payment and as a saving tool (an investment), however Russian residents are not allowed to receive digital currencies as payment for goods, works or services. In addition, nobody in Russia is allowed to distribute any information about possible settlements in digital currencies;
- there is a requirement to notify (in essence, declare) the ownership of any digital currency and any transactions with it, and this is a condition to judicial protection of such transactions;
- the rights certified by the digital financial assets become available to the first holder of those digital financial assets after the crediting of the relevant digital financial assets to that person in the information system in which the digital financial assets are issued;
- the law regulates the roles of both the operator of the information system in which the digital financial assets are issued and the exchange operator, as well as arrangements associated with the circulation of the digital financial assets.
Following lengthy discussions between the market participants over numerous drafts of the bill, the law is quite a compromise. In particular, the definition of digital currency has become broader to include digital currencies of foreign origin (e.g. bitcoins). However, Russian residents are not allowed to receive digital currencies as payment for any goods, works or services (which is not consistent with the definition of digital currency as a means of payment).