The Duma adopted the law “On digital financial assets”. What is important to know

The document defined the concept of “digital currency”, prohibited it from paying and advertising suchpossibility. Here's how this will affect the development of the blockchain industry in the country.

On July 22, the State Duma adopted in the third reading the law “Ondigital financial assets ". The document defines cryptocurrency, but prohibits its use in Russia to pay for goods and services. Advertising of digital money payment methods also falls under the ban. The new rules will come into force on January 1, 2021.

According to the law, digital currency is“a set of electronic data (digital code or designation) contained in an information system that is offered and (or) can be accepted as a means of payment that is not a monetary unit of the Russian Federation, a monetary unit of a foreign state and (or) an international monetary or unit of account, and/or as an investment and in respect of which there is no person obligated to each holder of such electronic data.”

What you need to know about the new law

Chairman of the State Duma Financial Market CommitteeAnatoly Aksakov explained that cryptocurrency was defined as a digital code that is used as a means of payment and a store of value, as an investment. But in Russia it is prohibited to use it to pay for goods and services.

Also, the criminal andadministrative responsibility. According to Dmitry Kirillov, senior lawyer of tax practice at Bryan Cave Leighton Paiser (Russia) LLP, lecturer at Moscow Digital School, this does not mean that such norms will not be included in a separate bill. This is hinted at by the conclusion of the Legal Department of the State Duma.

“Compared to the May version, the billhas been significantly redesigned. The rules on the regulation of digital currency (cryptocurrency in the usual sense) have been transferred from a separate law to the law on DFA,” the expert explained.

The concept of digital currency is enshrined in clause 3 of Art. 1 of the draft law "On CFA". It is made universal and allows it to be applied not only to crypto-assets issued in Russian information systems under the supervision of the Bank of Russia, but also, for example, to bitcoin.

“This is a positive change becauseInitially, the Civil Code of the Russian Federation, the law on crowdfunding and the bill “On CFA” included the Russian origin of cryptoassets, which took the entire array of global cryptoassets beyond the legal framework and made the prospects for the Russian cryptomarket very illusory,” added Kirillov.

Within the meaning of the bill, digital currencyrecognized as property, but not digital rights, which may require changes to the Civil Code. The revised cryptocurrency turnover is regulated by Art. 14 bill.

“The most odious provisions have been excluded from the text,allowing you to receive and transfer digital currency only by inheritance, in bankruptcy or in enforcement proceedings. At the same time, the ban on Russian residents accepting digital currency as payment for goods, works and services, as well as disseminating information about the possibility of making payments in digital currency, has been maintained,” the lawyer emphasized.

The need to declare (now called informing) about the ownership of digital currency and transactions with it remains necessary. This is a condition for judicial protection of such transactions.

According to the new version of the bill “On digitalfinancial assets" cryptocurrency in Russia can be bought, mined (this is the subject of clause 2 of Article 14 of the bill on the issuance of digital currency), sold, and made other transactions, but it cannot be paid to Russian residents. There is a certain contradiction in this, since the very concept of cryptocurrency in the same document implies its use as a means of payment.

The draft law makes a reference to individuallaws that will regulate mining, the organization of the issuance and circulation of digital currency in Russia. It is possible that these laws will contain other restrictions for such operations, Kirillov warned.

“In general, the new version of the bill no longer looks as draconian as the May one, but still personifies the Central Bank’s fight against money surrogates,” the specialist concluded.

Problems of the Law "On digital financial assets"

May 21, 2020A number of bills relating to the circulation and issuance of cryptocurrencies and providing for administrative and criminal liability for violations of their use were sent to the Ministry of Economic Development. At first, the documents were criticized in the community, then a negative position on them was expressed in several ministries at once, in particular, in the Ministry of Justice, the Ministry of Economy and the Ministry of Telecom and Mass Communications.

In the Russian Association of the Cryptoindustry,artificial intelligence and blockchain technologies (RAKIB) warned that the approval of the documents in the May edition will cause "irreparable damage to Russia." After criticism, the bills were found unsatisfactory and sent back for revision.

Head of the RACIB Legal Committee, memberElena Gultyaeva reminded of the Commission for Legal Support of the Digital Economy of the Moscow Branch of the Russian Lawyers Association that the law "On Digital Financial Assets" has been under consideration in the State Duma for more than two years. However, the edition submitted for consideration in the second reading does not provide for the regulation of the entire spectrum of relations regarding the creation and circulation of digital assets.

The bill still does not provide forthe possibility of remote identification of participants in transactions, which will not provide a full-fledged opportunity to attract investments to the market. However, the bill passed in the second reading may become one of the tools that will ultimately provide the opportunity for the full-fledged work of the cryptoindustry in Russia, the expert said. She added that for this, the legislation should not contain provisions that prevent the legal circulation of any digital assets, including cryptocurrency.

“In this sense, we positively evaluate the inclusion indigital currency concept bill. What is now needed is a balanced approach to the formation of a law on digital currency so that the adopted norms ensure a balance of interests of the state and business and provide legal guarantees for participants to work with innovative tools,” concluded Gultyaeva.

"Key to the industry is digital currency law"

The date of entry into force of the law “On DFA” is determined bybeginning of next year, January 1, 2021. Currently, the government is actively working to agree on positions regarding the document “On Digital Currency.” By September, lawmakers hope to arrive at a text that is most ready for public debate. The government has diametrically opposed positions regarding the legalization or prohibition of a new type of asset.

Development Director of EXMO Exchange Maria Stankevichstressed that the key for the industry is precisely the law "On digital currency", which is still under discussion. It was to this document that amendments were sent directly to the Ministry of Economic Development and the State Duma. According to Stankevich, the law "On CFA" is rather a glossary of concepts, from which in the future it will be possible to build on in lawmaking.

“We hope that the new document will be morecomplete and will contain a large number of updates that were previously sent as amendments. But we think it’s too early to rejoice because, as we’ve already mentioned, the current law is nothing more than a glossary. There may be surprises ahead of us,” Stankevich warned.

That the Russian authorities should be more activetake measures to digitalize the economy and high-tech industries in order to “expand development horizons” and “create a new structure of our economy,” President Vladimir Putin said in mid-July 2020. He called on the government to act more decisively and proactively to make the country globally competitive.

This year, Russian authorities have developed a plansupport for high-tech companies. The goal is to stimulate the export of Russian software and bring Russian startups from other jurisdictions back to the country. With the introduction of regulation of the digital money market, blockchain projects will also be able to count on preferences. In Russia, in addition to programs for digital money, hardware is also being developed, for example, devices for storing DFA.

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