Russian President Vladimir Putin signed a bill that makes crypto payments illegal, which will be a blow to the $940 billion asset class in the world’s 11th-largest economy.
Putin Bans Domestic Crypto Payments
According to a policy amendment on July 14, a law making it illegal for people to pay for goods and services with cryptocurrencies was signed into law yesterday by President Vladimir Putin.
Under the newly-passed law, which the Russian Assembly approved on July 8, cryptocurrencies and digital securities are no longer accepted as “monetary surrogates.” They thus cannot be used as a means of payment. The law also forbids other monetary units, leaving the indefatigable ruble as the only accepted currency across Russia.
Exchange operators and crypto-related businesses will be held responsible for any law violations. Such operators will be required to present transactions and other actions to the Russian central bank’s registry as part of the national payments system and to prohibit the provision of leverage and yield products to their customers.
The law further dictates that the government can confiscate financial assets sans the involvement or authorization of the crypto exchanges. Moreover, securities backing crypto and digital assets could be lawfully abrogated without informing the holders.
Russia’s Love-Hate Relationship With Crypto
Government units and lawmakers have long struggled to reach a consensus on the acceptance and usage of cryptocurrencies within the Russian Federation. In other words, the country has had a complicated relationship with bitcoin.
Russia initially floated a ban on crypto payments in 2020. The Bank of Russia also previously called for a blanket ban on using and mining cryptocurrencies. In May, however, the central bank confirmed that it wouldn’t object to using cryptocurrencies for international transactions while still maintaining that they pose large risks for Russian citizens and the country’s economic infrastructure.
On the other hand, Minister of Industry and Trade Denis Manturov has affirmed that crypto payments would be legalized “sooner or later in one format or another.”
Russia has also come under the spotlight since the beginning of the war with Ukraine for its alleged use of cryptocurrencies to blunt the force of international financial sanctions levied against it.