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Russia, like international regulators, is testing the introduction of tokenized digital currencies to its financial system. According to the regulation of digital and crypto assets that came into force on January 1, 2021, the trading of DFAs or digital financial assets was authorised. It is also legal to exchange DFAs of different types or exchange them into different digital assets.¹

DFAs are recognized as digital assets, including:

1. monetary claims;
2. an entitlement to the rights attached to the issued securities;
3. the capacity to become part of the capital of a non-public corporation; and
4. the issued securities can be transferred on request. ¹

The legislation establishes the term "digital currency" (not cryptocurrency), and defines it in the following quote: "a series of digital data (digital code or reference) contained in the information system that is offered and/or can be accepted as a means of payment that does not constitute a monetary unit of Russia, a foreign country or an international monetary unit or a unit of payment and/or as an investment." It means that traditional cryptocurrencies such as Bitcoin and Ether are recognized in this law as digital currencies. As for the "digital rouble", it is feasible its circulation will be addressed in an independent federal law. The law in force may serve as a basis for this new legislation, with the following provisions being fundamental:

• payments for fees or services in digital currency may not be made or accepted by Russian legal entities, Russian branches, representative offices of foreign legal entities, or by individual Russian tax residents; and
• advertising digital currencies as a means of payment for goods, works, or services is not permitted; this is in clear contradiction to the definition of digital currencies as "offered or may be accepted as a means of payment". ¹

Smart contracts in Russia

Fintech in Russia

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Notes

1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/russia