The Lower House of the Russian Federation has voted to enact a law on the ‘digital economy’ which will come to effect from October 2019.
President Putin had asked the Federation to draft a bill related to virtual assets so that they can be regulated in Russia. The Federation recognized the widespread use of Blockchain and cryptocurrency in Russia, and have hence, included it in the Russian Law.
The law is passed to regulate the Bitcoin and cryptocurrency markets in Russia while providing conditions for introduction and transaction of the same. The Russian senate has also envisioned the ‘tax regime’ is a relation to such virtual assets.
However, the bill is introduced as a series of norms for the citizens rather than a direction to the executives; regarding the responsibilities of the citizens while using such ‘digital assets.’
Vyacheslav Volodin, Chairman of the Russian State Duma, said the virtual rights law “forms the basis for the development of the virtual economy. This is a new area for our rights, thus it is important for us to consolidate the basic concepts.”
Cryptocurrencies are Digital Rights, Not Money:
According to the Senate, the law on virtual rights will apply to ‘digital money’ as well. The bill specifies that: the creation of digital rights, the scope of their use and turnover will be determined by federal laws containing regulations public law and developed with the participation of the Bank of Russia, Ministry of Finance, Ministry of Economic Development and other departments.
According to the new law, ‘digital rights’ rules will apply to ‘digital money (or cryptocurrencies).’The law also established that ‘digital money’ or more commonly cryptocurrencies are not legal means of payments. Nevertheless, individuals and entities can accept it as a means of payment in controlled quantities.
Moreover, it further hinted at the requirement of KYC and AML compliance and called for technical recording mechanism to retain transparency with the government.
Smart Contracts Also Get A Partial Approval:
The law also defined the concept of ‘smart contracts’ being an automated process and confirmed that the same rules of virtual rights apply to smart contracts as well. Hence, identity verification and record transaction are essential for its use in Russia.
The Russian Federation confirmed that post its implementation, the unregulated ‘tokens market’ will cease to exist. The Federation is concerned about the use of cryptocurrencies in financing terrorism and money laundering. Hence, the inclusion of ‘digital rights’ law into the Russian civil code will provide for a legal framework for establishing a tax regime on it as well.