A new law regulating digital assets makes cryptocurrencies legal in Russia under government control. However, no one can use them to pay for goods or services in the country.
In recent years, the relationship between cryptocurrencies and governments has become increasingly complicated. However, governments and regulatory institutions had at first been reluctant to pay attention to Bitcoin and Blockchain technology.
As crypto assets gain in importance, they become a threat to governments’ monopoly on monetary policy. Despite this, cryptocurrencies are legal in Russia from now on.
Bitcoin and Governments
Regarding the relationship with governments, there is an important separation between blockchain technology and cryptocurrencies. Although Bitcoin has been the instrument that has allowed blockchains to become popular worldwide, governments such as Russia have distinguished the product from the technology in their approach to both.
The governments of the world consider blockchain technology as a vital element to achieve economic prosperity and stay competitive in the international arena. Rather, they see them as threats to the monetary order that they have established with central banks at their core. Therefore, it is an element that requires regulation or simply its prohibition.
The creation of cryptocurrencies arose with the aim to replace fiat money as a means of payment and a store of value worldwide. For that reason, it makes sense that governments like that of Russia do not welcome the expansion of their adoption, trying to establish all possible mechanisms to control virtual currencies. Additionally, many countries have included the creation of their government virtual currencies to compete with cryptocurrencies.
Cryptocurrencies Achieve Legal Status in Russia
However, the big problem that governments face when trying to deal with cryptocurrencies is that the technology already exists and has spread across the world. Thus, it would be impossible to wipe crypto-assets off the face of the earth. They are a reality that governments must face and that their legislation must adapt to.
For this reason, Russia has passed a law on the regulation of digital assets, which guarantees cryptocurrencies a legal status. However, there will be a prohibition on its use as a means of payment in the country as of January 1st, 2021.
Digital money has gained recognition as “an aggregate of electronic data that people could use as a means of payment.” Since “it is not the monetary unit of the Russian Federation or a foreign state,” no one can use “digital money to pay for any good or service.”
Despite this, the new law gives Russian banks and exchanges the right to become cryptocurrency operators, as long as they declare their activities to the Central Bank of Russia. With this, the regulation seeks to guarantee legal protection to holders of digital assets that declare them before the government. Despite the ban on its use as a payment method, it is a step forward for cryptocurrencies.
By Alexander Salazar
