Today, Russian President Vladimir Putin signed a bill that makes it illegal to use digital assets. Assets like cryptocurrency and nonfungible tokens to pay for goods and services in Russia.
Ban on using digital assets
The law comes almost seven months after Russia’s central bank asked for a ban on using and mining cryptocurrencies. It does not make it illegal to own cryptocurrency and digital assets. But It does limit how they can be used. “It is forbidden to transfer or accept digital financial assets as a counter-provision for the transferred goods, work performed, services provided, as well as another method that allows assuming payment by the digital financial asset of goods (works, services), except in cases provided for by federal laws,” the law states.
In January, the call for a ban was based on the idea that digital assets threaten the country’s financial stability. Also on people’s health. “The breakneck growth and market value of cryptocurrency are defined primarily by speculative demand for future growth, which creates bubbles,” the central bank said. “Cryptocurrencies also have aspects of financial pyramids because their price growth is largely supported by demand from new entrants to the market.”
It is unclear exactly how many people in Russia will be affected by the new ban. It doesn’t say anything about mining cryptocurrency. So the law shouldn’t affect Russia’s mining community, which was the third largest in the world as of April. The law also doesn’t make it illegal to own or trade cryptocurrencies directly, so that it won’t affect most people in Russia much.
Russia’s strange relationship with crypto
Russia has a strange history with cryptocurrencies. At times, it has tried to ban them, and at other times, it seems to have attempted to legalize them. In 2018, Russian banks were planning to test cryptocurrencies, but people in Russia were organizing to stop them.
When Russia invaded Ukraine in February, people tried to get cryptocurrency exchanges to close the accounts of Russian citizens. But leading businesses said no. In April, the U.S. Treasury Department sanctioned Russian-owned cryptocurrency mining company Bitriver AG as part of a crackdown on companies and people trying to avoid sanctions on Russia.