Russian President Vladimir Putin reportedly signed the cryptocurrency bill “On Digital Assets”, which effectively provides legal status to cryptocurrencies in the country. The crypto law, approved by Russia’s legislative body (State Duma), will be implemented from 1 January 2021.
The landmark crypto law legitimizes cryptocurrencies and allows crypto trading in the country. However, the law does not allow cryptocurrencies to be used as a method of payment. This means that although Russian residents can buy, sell or trade Bitcoin, they are still not allowed to use it to purchase products, goods or services, as they will compete with the Russian Ruble.
The bill allows banks and exchanges to become stock market operators as long as they register with the central bank of the country, the Russian Central Bank.
Effect of the Law on Bitcoin (BTC) Mining
The bill is quite striking because it sets out a legal definition for cryptocurrencies without these definitions that will be subject to different interpretations by companies and even courts. Digital financial assets are defined as digital rights with the money claims that a non-public company can be used as a securities and transferred to another person.
However, in particular, the bill did not have definitions for important crypto terms such as “mining”, where Russia was an important global player in the Hash Rate race. Bratsk city, located in Siberia, is an important crypto mining capital of the world.
During quarantine, Bitcoin transaction activity in Russia also increased. According to the peer-to-peer site Paxful, Russia is the biggest market of its rival LocalBitcoins. Data from Coin Dance unveiled increased trading volume for LocalBitcoins in Russia, while Paxful said that Russian users increased their market share by 364% from spring 2019 to 2020.
With the effective recognition of the new law cryptocurrency, initiatives are taking place rapidly. Local news media Kommersant reported that Russia’s largest bank Sberbank plans to issue a stablecoin in accordance with the newly accepted cryptocurrency law.