Russians Can Invest in Crypto But Not Use as Medium of Exchange

© Reuters Russians Can Invest in Crypto But Not Use as Medium of Exchange

• The Russian government has amended its existing law to criminalize using cryptocurrency as a medium of exchange.
• The law, however, did not ban crypto investment for Russians.
• The Russian parliament recently approved a draft law to grant tax relief to issuers of digital assets and cryptocurrencies.

The Russian government and central bank have ultimately decided after long debating what to do about cryptocurrency.

On Thursday, July 14, the Russian State Duma published “Amendments to Certain Legislative Acts of the Russian Federation.” This publication also suspended the earlier provisions of Article 5.1 of the federal law on “Banks and Banking Activity.”

This newly amended law cancels the use of cryptocurrency to purchase goods and services on Russian soil and has effectively been signed by President Vladimir Putin. The law, as published on the Russian parliament’s official website and translated by Google (NASDAQ:GOOGL) Translate, reads:

“It is prohibited to transfer or accept digital financial assets as a consideration for transferred goods, performed works, rendered services, as well as in any other way that allows one to assume payment for goods (works, services) by a digital financial asset, except as otherwise provided by federal laws.”

In January, the Bank of Russia proposed a complete ban on crypto for payments. But, today’s enacted law is much lighter than that. Likewise, in February, Russia’s Ministry of Finance submitted a draft of cryptocurrency regulations to the government, which, like the law enacted today, allows for investing in digital assets like Bitcoin or Ethereum but not using them as a medium of exchange.

CoinQura reported on June 28 that the Russian parliament approved a draft law to potentially excuse issuers of digital assets and cryptocurrencies from value-added tax (VAT). Under the law, the tax would be 13% for Russian companies and 15% for foreign ones, a reduction from the existing 20% rate.

Russia has been in the crypto spotlight since the country invaded Ukraine, forcing big crypto companies like Binance and Coinbase (NASDAQ:COIN) to comply with US and EU regulations limiting Russians from using exchanges.

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