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New Bill Aims to Allow Crypto Payments in Russia

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A new bill that aims to protect the rights of cryptocurrency owners while still regulating the use of the digital coins for payments has been tabled in Russia’s parliament. The draft defines terms like “digital rights” and “digital money.” It allows financial authorities to subject cryptocurrencies to taxation, bankruptcy claims, and inheritance rights.

Digital currency to be a legal means of making payments

The draft, co-sponsored by Vyacheslav Volodin, Speaker of State Duma, and Pavel Krasheninnikov, who heads the Parliamentary Legislation Committee, is expected to amend the country’s Civil Code, creating grounds for “legal relations within the digital economy.” The bill, if passed, will effectively legalize digital financial transactions.

The bill (No. 424632-7) was filed about seven days after another bill (No 419059-7), prepared by the Ministry of Finance, was introduced. Critics say that according to the latest version of the bill, the law on “Digital Financial Assets” will regulate ICOs (Initial Coin Offerings) and the mining of cryptocurrency, but it’ll ban cryptocurrencies themselves. The Central Bank of Russia will determine the fate of cryptocurrencies such as bitcoin. The central bank has on multiple occasions opposed the exchange and circulation of digital coins in the country.

The new law refers to cryptocurrencies as “digital money.” According to the authors of the draft, it is necessary to define cryptocurrencies among other “digital” terms legally so that the legal rights of the participants in virtual money transactions are protected. It reads that the acceptance of digital currency for deposits, transfers, payments, and units of account won’t be obligatory in Russia. However, the bill also allows the use of cryptos as a means of making payments when it is technically possible, and all risks are excluded.

“In perspective, digital currency shall be used as some payment instrument, but on terms and in cases established by law,” stated Pavel Krasheninnikov. Users’ data will be collected, and qualities will be controlled. Lawmakers say that this is going to allow financial authorities to track cryptos in such cases as the application of inheritance rights or bankruptcy.

Change expected to take effect by May

This piece of legislation is anticipated to facilitate digital deals such as smart contracts. All digital confirmations are going to be as valid as signatures and statements. This regulation of digital user rights creates grounds for taxation in the digital space. It offers measures to avoid laundering of funds obtained through illegal means.

If the bill is adopted, the new law should be effective by 1st May 2018. Supplementary regulation will determine the various aspects of digital rights and circulation of digital currencies. The regulation will be developed by the Ministry of Economic Development and the Ministry of Finance in conjunction with the Central Bank of Russia.

The legal standpoint of cryptos has for long been a topic for regulatory debates in Moscow. Institutions like the Ministry of Finance and the Central Bank have on various occasions had different opinions concerning the matter. There have been multiple proposals, ranging from legalizing crypto trading to banning it altogether. If the Russian parliament passes the bill, cryptocurrency may, after all, be accepted as a legal means of payment.

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