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Russia's Crypto Law is Taking a Confusing Shape

Russia's Crypto Law is Taking a Confusing Shape 101
Source: iStock/Ivan Vislov

A Russian newspaper says it has seen a copy of the much-awaited draft law "On Digital Financial Assets" – a piece of legislation that might decide the fate of cryptocurrencies in the country. However, local experts do not agree what this draft means exactly.

RBC states that "two sources familiar with the matter" confirmed the authenticity of the document, which has been drawn up by a parliamentary committee.

And it appears that Moscow is prepared to allow traders to buy and sell "digital financial assets" (e.g. tokenized bonds, shares, but it does not include tokenized real estate, or cryptocurrencies such as Bitcoin) that originated outside Russia on domestic exchanges. The possibility of making transactions in Russia using overseas digital financial assets was not mentioned in the bill's first incarnation.

Crucially, the media outlet states, there is no mention of terms such as "token" in the legislation, while "digital financial assets," agreed experts interviewed by RBC, can be interpreted in number of different ways. Also, the experts are confused about another new term in the draft, "digital currencies," as it's not clear what it means exactly and how it might affect crypto trading in Russia.

In either case, RBC quotes Anatoly Aksakov, the head of the parliamentary finance committee, as stating that if the bill is approved, it could be passed through the Duma and adopted into law before the end of the year.

But the Central Bank – perhaps the most vocal opponent of all things cryptocurrency-related in the country – refrained from commenting on the story.

Readers with long memories my recall that the first reading of "On Digital Assets" gained Duma approval all the way back in May 2018.

Since then what has followed has been a seemingly unending impasse, with pro-blockchain forces coming up against a brick wall in the form of the Central Bank, which is reportedly in favor of a China-style crypto-crackdown.

There have been plenty of false dawns and delays already in the run up to the second reading of the bill so far, but per Russian experts, the latest development in this long saga is decidedly positive.

One possible catch is the fact that cryptocurrency exchanges will need some serious financial backing if they intend to do business in Russia.

The draft law stipulates that exchange will need to prove they have capital and net assets of at least USD 788,000, and its founders must own more than 5% of the company's shares. Legally approved cryptocurrency exchanges will also need to provide proof that they have an appropriate management structure, an internal control team and risk management systems in place.

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